The good news first of all: the Turkish economy is on the road to recovery after last year’s economic crisis. Survey-based leading indicators indicate that it has now bottomed out. The low level of inflation compared to the autumn of last year and the interest rate cuts have obviously given businesses and consumers back some confidence.
This has also had a positive impact on growth figures. Since the beginning of the year, Turkey’s economic performance has picked up surprisingly quickly. However – and this is the bad news – the pace of growth has now slowed noticeably again. In the third quarter, Turkey’s gross domestic product increased by only 0.4% compared with the previous quarter. Between April and June, the rate was even stronger at 1.0%.
The Turkish economy is therefore not on a very steep, but rather a very bumpy recovery path. Economic growth could weaken further in the fourth quarter – we do not even rule out a negative rate. In any case, there are enough risks for the economy. Just to name a few: Inflation picked up again recently in November and could rise again in the coming months, unemployment is high, economic sanctions are still threatening from the US side, and finally there is the weak economic situation of Turkey’s important trading partners, especially in Europe. The economic environment remains difficult.