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Turkey went into recession at the end of last year, according to the country's official statistics office.

The Turkish Statistical Institute said the economy shrank by 2.4% in the fourth quarter of 2018, from the previous quarter.

It followed a 1.6% drop the previous quarter, making two quarters of falling growth - the definition of recession.

A trade war with the US sparked a steep fall in Turkey's currency, making imports far more expensive.

The two countries are opposed on a range of issues including how to fight the Islamic State group in Turkey's neighbour Syria, Turkey's plans to buy Russian missile defence systems and how to punish the alleged plotters of a failed coup in Turkey in 2016 which attempted to topple President Recep Tayyip Erdogan.

Turkey also wants the extradition of a Turkish cleric now living in the US who it has charged with terrorism and espionage.

Turkey's lira fell by 30% against the dollar last year, making imports on average a third more expensive.

That prompted the central bank to raise interest rates, making borrowing more expensive.

Car and housing sales suffered as a result and industrial production was also hit.

The final quarter's data leaves economic growth of 2.6% overall for 2018, the slowest since 2009, and a marked reverse from 2017's growth rate of 7.4%.

Worst over?

The news comes as President Erdogan, fights to keep his party in control of key cities Ankara and Istanbul in nationwide local elections.

Rising prices, especially for food, and high unemployment, are major election issues.

Turkey's finance minister, Berat Albayrak, said the worst was over and he expects the economy to return to growth by the end of this year.

But analysts at Capital Economics expect the economy to perform poorly this year.

"While the worst of the downturn may now have passed, the weak carryover means that we expect GDP to decline by 2.5% this year," the firm said in a research note.

It adds, though, that is it more gloomy than other commentators.</s>Why did this happen?

Please make sure your browser supports JavaScript and cookies and that you are not blocking them from loading. For more information you can review our Terms of Service and Cookie Policy.</s>Turkey's economy entered its first recession since 2009, official data showed on March 11, three weeks before President Recep Tayyip Erdogan's government faces local elections where growth and inflation will be key issues for voters.

Economic output contracted by 2.4 percent in the final three months of the year compared to the third quarter on a seasonally and calendar-adjusted basis, the Turkish Statistics Institute (TUIK).

That followed a drop in the third quarter as well. Two consecutive quarter-on-quarter contractions in economic output is widely considered to be the definition of a recession.</s>While not exactly a surprise after its currency tumbled in 2018 as inflation soared, interest rates jumped, credit collapsed and the country was briefly targeted by US sanctions, overnight Turkey reported that its GDP tumbled by 2.4% last quarter in line with expectations, following a decline of 1.6% in Q3, officially entering a recession for the first time since the financial crisis.

The economic contraction will likely deal a blow to Turkey's executive president Recep Tayyip Erdogan as the country heads toward bellwether municipal elections this month, although it is unlikely to result in any major political surprises.

For much of the past decade, capital poured into Turkey during an era of record monetary stimulus around the world driven by Erdogan’s push for growth at all costs and his pressure on the central bank to keep interest rates low. However this uninterrupted expansion that boosted the economy by an average of nearly 7% each quarter since late 2009 ended abruptly following a currency crash, policy missteps and an unprecedented diplomatic rift with the U.S, Bloomberg reported.

“This is an indictment of Erdonomics and a direct consequence of a monetary policy in 2018 conducted in the interests of short-term political expediency rather than economic pragmatism,” said Julian Rimmer, a trader at Investec Bank Plc in London.

The recession lays out the dilemma facing both Erdogan and his central bank: while the country desperately needs lower rates to preserve its impressive economic growth rate, inflation remains solidly in the double digits, and any interest rate cuts threaten to unanchor the lira, sending it tumbling once again and unleashing runaway inflation. Meanwhile, investors are worried that that Turkey will face a long slog to recovery as the torrent of foreign capital dries up while households and companies begin paying down debts. Indeed, private consumption tumbled at a whopping 8.9% last quarter, with Turkey’s GDP per capita falling to $9,632 from a little over $10,000 in 2017.

The Turkish lira declined as much as 0.5% after the data release however it has since recouped all losses as Japanese retail investors scrambled to buy the latest dip.

Despite the downturn, Treasury and Finance Minister Berat Albayrak said the silver lining is that the worst is now behind Turkey and the economy is on track for a rapid recovery. Rising exports and tourism income will be the key drivers for growth, he said on Twitter.

Whether he is right remains to be seen, however the undoing of Turkey’s growth model comes at a sensitive time for Erdogan, who braces for his first test at the ballot box since assuming vastly expanded executive presidential powers last year. After the March 31 vote, Turkey isn’t scheduled to hold another election for four years.

In its scramble to reboot growth, the government has pressured state banks to ramp up lending, helping annualized credit growth turn positive last month for the first time since August. It recapitalized three of its lenders by selling bonds to Turkey’s unemployment fund, and is working on a fresh plan to further bolster state-owned banks’ capital. However, for now the outlook remains bleak. GDP may be in contraction through the first half of 2019, followed by four quarters of tepid growth that will average less than 3 percent from a year earlier, according to analyst consensus.

Adding to Turkey's misfortunes, the central bank is holding rates high to stabilize the lira and keep inflation in check; as a result of high rates, credit shrank by 7.2% on a quarterly basis in the last three months of 2018. This trickled through the economy where industrial production recently plunged by the most in a decade.

“Unlike Turkey’s past V-shaped recoveries, there’s the significant risk that the recovery will be much slower this time round,” said Inan Demir, an economist at Nomura International Plc in London. “The entire Turkish economy may be facing deleveraging pressures.”</s>Turkey's economy entered its first recession in a decade, official data showed on Monday, just weeks before President Recep Tayyip Erdogan's government faces local elections where growth and inflation will be key issues for voters.

Economic output contracted by 2.4 percent in the final three months of the year compared to the third quarter on a seasonally and calendar-adjusted basis, the Turkish Statistics Institute (TUIK) said.

That followed a drop in the third quarter as well. Two consecutive quarter-on-quarter contractions in economic output is widely considered to be the definition of a recession.

The economy shrank by 3 percent in the fourth quarter of 2018 compared with the same period in the previous year.

Growth came in at 2.6 percent for 2018 overall, but that was still much lower than the 7.4 percent recorded in 2017, a turbulent period following the 2016 failed coup and terror attacks.

The flagging economy coupled with a currency crisis last year are sensitive issues for Erdogan and his ruling Justice and Development Party (AKP) before the vote on March 31. The Turkish leader has often boasted of the country's strong growth during his time in power.

Inflation has also remained high. It struck a 15-year peak in October at 25.24 percent before falling below 20 percent in February, with food prices hit particularly hard.

The last time Turkey entered a recession was in 2009 after the global economic crisis hit foreign and domestic demand.</s>Shortly before the local elections, the Turkish statistics office announced that economic output in the final quarter of 2018 fell by 2.4 percent.

The Turkish economy slipped into recession at the end of 2018. As reported by the statistics office in Ankara on Monday, economic output (GDP) in the final quarter fell by 2.4 percent on quarter. The decline follows a minus in the third quarter of revised 1.6 (initially 1.1) percent. Analysts had expected development.

According to one common definition, Turkey has slipped into a phase of economic recession. Economists say that when an economy shrinks for two quarters in a row. For the political leadership, the downturn comes at an inopportune time because local elections take place in Turkey at the end of March.</s>The flagging economy coupled with a currency crisis last year are sensitive issues for President Recep Tayyip Erdogan and his ruling Justice and Development Party before the vote on March 31

ANKARA, Turkey – Turkey's economy fell into its first recession in a decade, official data showed on Monday, March 11, just weeks before President Recep Tayyip Erdogan's government faces local elections where growth and inflation will be key issues for voters.

Economic output contracted by 2.4% in the final 3 months of the year compared to the third quarter on a seasonally and calendar-adjusted basis, the Turkish Statistics Institute (TUIK) said.

That followed a revised 1.6% contraction in the third quarter. Two consecutive quarter-on-quarter contractions in economic output is widely considered to be the definition of a recession.

The flagging economy coupled with a currency crisis last year that battered the lira are sensitive issues for Erdogan and his ruling Justice and Development Party (AKP) before the municipal vote on March 31.

The Turkish leader, in power since 2003 first as prime minister and then as president, has often boasted of the country's strong growth during his time in government

Growth came in at 2.6% for 2018 overall, but that was still much lower than the 7.4% recorded in 2017, a turbulent period following the 2016 failed coup and terror attacks.

The economy shrank by 3% in the 4th quarter of 2018 compared with the same period the previous year.

Inflation has also remained high. It struck a 15-year peak in October at 25.24% before falling below 20% in February, with food prices hit particularly hard.

Erdogan's government has sought to curb consumer prices, especially for produce consumed every day in Turkish households.

Turkish authorities last month set up their own vegetable stands in a bid to force markets to lower food prices.

But analysts said economic data showed inflation was still weighing on household consumption, and domestic demand was weak.

Turkish Finance Minister Berat Albayrak, who is also Erdogan's son-in-law, said on Twitter the data was as expected, but "the worst is behind us."

That analysis was shared to some extent by the London-based Capital Economics research firm, but they offer cold comfort for Turkey's economic outlook.

"While the worst of the downturn may now have passed, the weak carryover means that we expect GDP to decline by 2.5% this year," said Jason Tuvey, senior emerging markets economist at Capital Economics.

Albayrak blamed the recession on "speculative attacks" and the current global economic slowdown.

While Turkey's economy was hit when US President Donald Trump doubled tariffs last year on Turkish steel and aluminium, confidence was further eroded by a bitter row over a detained American pastor.

The lira plummeted in value in August. While an aggressive interest rate hike in September helped brake its fall, economic activity stalled while prices of goods shot higher.

The last time Turkey entered a recession was in 2009 after the global economic crisis hit foreign and domestic demand. – Rappler.com</s>March 11 (UPI) -- Turkey has moved into a recession for the first time in nearly a decade after sluggish economic growth at the end of 2018.

Economists said the Turkish economy slid by 2.4 percent for the final three months of last year. That followed a 1.4 percent slump in the third quarter, new figures showed Monday.

Several other indicators like the construction sector and consumer expenditures also fell.

Turkish President Recep Tayyip Erdogan blamed the economic downturn on foreign intervention and has threatened to jail dissidents if they protest. The United States imposed sanctions on Turkey last year but they were lifted after U.S. pastor Andrew Brunson was released from a Turkish prison. Ankara had been holding him on accusations he was involved in an attempted military coup in 2016.

Turkey's lira currency lost 30 percent of its value in 2018 and inflation rose 20 percent. The fourth-quarter slide was the worst in nine years. The Turkish economy grew by 7 percent in 2017.

The downturn in Turkey's economy comes as the country prepares for elections March 31.

"The question or risk factor is the government's response," analyst Tim Ash said. "Any unorthodox response at this stage will make things much worse."

For years, Erdogan pressured the central bank to keep interest rates low, but that ended when the lira crashed and the United States imposed sanctions.</s>Ever since the financial crisis cut the Dow Jones Industrial Average in half, investors have been waiting for the next recession—and bear market. Now, Standard & Poor’s has some consoling words for investors: It won’t be as bad as the Great Recession.

The back story. We all know how traumatic the financial crisis was. It wasn’t just the fact that the S&P 500 dropped 57% from top to bottom, while the Dow tumbled 52%. It was the sense that the whole financial system could come to an end—and that some people weren’t only arguing in favor of that outcome, but planning for it to. It has been 10 years since the market bottomed, but it seems like many investors have spent the last decade waiting for the bull market to end, despite the fact that the S&P 500 has returned 410% including reinvested dividends since then.

What’s new. In a report released Tuesday, Standard & Poor’s Terry Chan and team argue that the conditions that turned a run of the mill recession into a crisis aren’t apparent today—despite more debt outstanding as a percentage of GDP than in 2008.

The authors argue that investors have “confidence in major Western governments’ hard currency debt,” while China has the means and the motive to prevent widespread defaults.” Not that there aren’t risks. S&P notes that low rates have caused investors to put their money in “less traditional and more specialized products,” that market liquidity could evaporate, and that forced selling could end up being a problem.

“Nonetheless, we believe the next global debt crisis is unlikely to be as severe as the one in 2008-2009,” Chan and team conclude.

Looking ahead. No one knows what the next recession will look like and how it will play out. There are perma-bears who have been predicting an “ice age” since even before the financial crisis, and there are bulls who worry the next downturn could be more painful for the real economy and for workers. I’ve seen predictions that we could see a repeat of the short recession from 1990-1991, which lasted just eight months. The only predictions I feel comfortable making are that there will be a next recession, and that it won’t be the same as the financial crisis.

So what can we do? For now, at least, we can get our allocations right, and try to tune out as much of the noise as possible. For what it is worth, I don’t think we’re poised for an imminent growth slowdown, and I do believe the S&P 500 can hit another new all-time high.

But I’ve been wrong before.</s>Turkey has entered a recession, recording two consecutive quarters of falling economic growth, according to government figures released Monday, casting a blow for President Recep Tayyip Erdogan ahead of critical local elections at the end of the month.

Mr. Erdogan has led Turkey through 18 years of continuous growth — making it a leading emerging market — but much of the growth of the last few years has come through unrestrained borrowing. The lira also plunged in value in mid-2018, amid global investor concerns and a sharp fall in consumer demand.

The Turkish Statistical Institute announced that Turkey’s gross domestic product shrank by 2.4 percent in the fourth quarter of last year compared to the previous quarter, after season al adjustments. That fall followed a decline of 1.6 percent in the third quarter. A recession occurs, by some definitions, after two quarters of contraction.

The recession arrives in the midst of a global economic slowdown that has reduced demand for Turkish exports and raised the cost of credit for its businesses. Growth in the European Union, Turkey’s most important market, has slowed to a crawl while Italy is in recession and Germany close to one.
The Turkish economy enters a recession for the first time since 2009 after the currency and debt crisis of 2018.