Turkey’s entered its first recession in a decade at the end of last year that saw the lira crash and trade tensions with the US rise amid political pressures on the central bank to keep interest rates low.
Gross domestic product shrunk a seasonally and calendar adjusted 2.4 percent from the third quarter when it decreased a revised 1.6 percent. Two consecutive quarters of decline suggest a technical recession.
On a year-on-year basis, calendar adjusted GDP decreased 3.2 percent in the fourth quarter after a 2.3 percent expansion in the previous three months.
The chain-linked GDP fell 3 percent year-on-year after a 1.8 percent increase in the previous quarter.
The full year growth in 2018 was 2.6 percent versus 7.4 percent in 2017.
The recession is bad news for President Recep Tayyip Erdogan’s government which is set to contest municipal elections at the end of this month.
Household consumption sunk 8.9 percent year-on-year in the fourth quarter.
“Domestic demand weakness is likely to linger as unemployment stays on the upwards trend and credit activity remains subdued, but having said all of that, recent momentum indicators on lending hint early signs of stabilisation,” ING economist Muhammet Mercan said.
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