Turkey falls into recession - Interest rates continue to remain very high
Turkey's economy shrank by 0.2% quarter-on-quarter in the July-September period, the Turkish Statistics Institute said on Friday.
This follows a decline at the same rate in the second quarter of the year, confirming that the economy is in recession.
Turkey recorded growth of 2.1% year-on-year in the third quarter, following a reading of 2.4% in the April-June period.
Household consumption shrank by 0.3% in quarterly terms and government consumption fell by 0.4%.
Compared to a year ago, household consumption increased by 3.1% and government consumption decreased by 0.9%.
"The central bank suggested at its meeting last week that it thought domestic demand was slowing and today's data supports that view," said Nicholas Farr, Emerging Europe Economist at Capital Economics.
"This could raise expectations that the central bank could cut interest rates shortly after the December meeting," he noted - although he argued that this would be "questing the gun".
Inflation is still strong in Turkey, reaching 48.6% year-on-year in October. Farr predicted that interest rate cuts would likely begin early next year.
The base rate has been kept at 50% for eight consecutive months, which has reduced consumption.
Imports of goods and services also fell by 9.6% year-on-year in the third quarter, allowing Turkey to improve its trade deficit.
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