Turkey’s economic rebound will be ‘gradual’, says EBRD

Turkey’s economy will contract one per cent in 2019, predicts the European Bank for Reconstruction and Development. — AFP pic
Turkey’s economy will contract one per cent in 2019, predicts the European Bank for Reconstruction and Development. — AFP pic

LONDON, May 8 — Turkey’s troubled economy will contract one per cent this year before a “gradual” rebound, the European Bank for Reconstruction and Development forecast today.

“Turkey’s recovery from an expected 1.0 per cent economic contraction in 2019 is likely to be gradual,” the London-based EBRD said in a report at the opening of its annual conference in Sarajevo.

“The lira’s depreciation and (Turkey’s) high interest rates will continue to dampen consumption and investment, although net exports should make a positive contribution to growth,” said the bank founded in 1991 to help former Soviet bloc countries switch to free-market economies.

“Growth of around 2.5 per cent is expected in 2020” for Turkey, added the EBRD, which now invests also in countries including Turkey, Jordan and Morocco.

The EBRD added that economic growth across all of its regions “of investment is broadly expected to track the global economy lower in 2019, before a likely upturn in 2020, when Turkey should return to positive territory”.

The bank’s latest economic outlook revised down predictions for 2019 — the EBRD now expecting average growth of 2.3 per cent from a November forecast of 2.6-per cent expansion.

The “downward revision to overall growth forecasts primarily reflects the expected slowdown in Turkey” it said, adding that overall growth across EBRD regions of investment should recover to 2.6 per cent in 2020.

Turkey slipped into recession for the first time in a decade last year following a sharp currency crisis that sent inflation soaring into double digits and hit Turkish households hard.

Its currency, the lira, is being hit once more by political upheaval in the country.

Turkish President Recep Tayyip Erdogan on Tuesday welcomed an order to re-run the recent Istanbul election, a move the opposition has branded an attack on democracy.

His ruling Justice and Development Party (AKP) lost the mayorship of Turkey’s biggest city by a narrow margin and has refused to accept defeat. — AFP

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