Ed Frankl of The Wall Street Journal reports that Turkey’s GDP shrinkage comes after months in which the central bank has kept its key interest rate at 50%. Frankl writes:
Turkey’s economy sank into a recession over the summer, with economic activity squeezed by high interest rates as the country’s central bank sought to tame inflation.
Gross domestic product shrank by 0.2% on a quarterly basis between July and September, according to data from the Turkish statistical agency on Friday, matching the contraction of the prior quarter, which had been revised downward. A recession is typically defined as two consecutive quarters of declining economic output.
Compared with the same quarter of 2023, the Turkish economy expanded by 2.1%, its slowest rate since the economic shock of the Covid-19 pandemic in the second quarter of 2020, the agency said. […]
The economic data suggests policymakers’ efforts to weaken demand are taking effect and that policy tightening is helping to rebalance the economy, Nicholas Farr, an emerging Europe economist at Capital Economics, said.
If the GDP figures are followed by lower-than-expected November inflation in data due on Tuesday, this could raise expectations that the central bank may cut rates as soon as the next meeting in December, he added.
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