© Reuters. FILE PHOTO: A street vendor sells toys at an underground passage in Istanbul, Turkey, May 31, 2019. REUTERS / Murad Sezer
By Ezgi Erkoyun
ISTANBUL (Reuters) – Turkey’s economy grew 7.5% year-on-year in the second quarter of the year, a Reuters poll showed on Wednesday, while full-year growth was forecast at 4%, showed a decline in economic activity in the second half of the five-year period reflecting weaker demand conditions.
The economy grew 7.3% year-on-year in the first quarter, helped by strong export activity and strong domestic demand. It is expected to stay strong in the second quarter.
President Tayyip Erdogan’s new economic program has prioritized growth and exports, and aims to tackle inflation by reducing Turkey’s chronic current account deficit rather than raising interest rates.
A cycle of Erdogan’s programmatic easing sent the lira ending last year down 44% against the dollar and down another 27% so far this year, bringing inflation to a 24-year high in the near future. 80% in July.
While the rate cuts are aimed at stimulating the economy, analysts predict that activity could cool in the second half of the year due to a downward trend in demand and an expected economic slowdown in the US. Turkey’s largest trading partners.
The median estimate of 13 economists in a Reuters poll for annual gross domestic product (GDP) growth in the second quarter was 7.5%, in a range of 5% and 8.7%.
Full-year growth was lower, with 18 economists’ median estimate of 4.05% and forecasts ranging between 3.3% and 5%.
Turkey’s central bank cited signs of weakness in the third quarter last week when it shocked markets by cutting its policy rate by 100 basis points to 13%.
“It is important that financial conditions remain supportive to sustain growth in industrial production and a positive trend in employment,” the bank said.
Finance Minister Nureddin Nebati said on Tuesday that he expected growth in the second quarter to be higher than the 7.3% recorded in the first quarter.
The Turkish economy is one of the few that can narrowly expand in 2020, thanks in large part to cheap loans. It bounces back in 2021, up 11%.
The Turkish Statistical Institute is scheduled to release its second quarter growth results at 07:00 GMT on August 31.
