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Turkish economic growth likely to have stalled in Q3 2018 - Commerzbank

Turkish economic growth is expected to have stalled in the third quarter and is likely to recover very slowly after policymakers deal with the corporate stress and loan defaults that are expected to turn up in the fourth quarter, noted Commerzbank in a research report.

Any rebound will also be totally conditional on the central bank acting independently and continuing to hike rates until inflation has peaked at some point in 2019. However, projections of greatly negative growth might equally prove overdone.

Yesterday’s industrial output gave some indication, where output dropped 1.1 percent sequentially as compared with consensus expectation of a decline of 2.4 percent. Lira’s most serious collapse was seen in August along with sudden-stop like behaviour by imports, bank lending and capital goods sectors.

“It is possible that September will bring more downside in manufacturing, but that appears less likely because trade and banking data have shown sharp reactions already. If the August data are indicative, we could see average annual GDP growth remain slightly positive next year (we forecast 1.2%) rather than sink into negative”, added Commerzbank.

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