Signs of slowdown in Turkey’s fast-paced GDP growth

After one of the best growth performances among peers in the second quarter, Turkey’s economy is showing signs of a slowdown that some investors say will morph into a technical recession later in the year.

Gross domestic output rose 5.2 percent during the three months through June from a year earlier, in line with the median estimate of 5.3 percent in a Bloomberg survey. While that keeps Turkey’s place among the world’s fastest-growing nations, a deeper dive into the data shows consumers and investors starting to hit the brakes, while government spending and exporters prevented a more rapid slowdown.

The lira’s recent depreciation, though it benefits exporters, will force the government to reduce spending and the central bank to raise borrowing costs to stabilize financial markets, said Inan Demir, an economist at Nomura International in London who had the most accurate prediction in the Bloomberg survey.


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