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Turkey: Risk of recession arises – Danske Bank

Analysts at Danske Bank note that the Turkish GDP growth saw a sharp slowdown in Q3 18, decelerating to 1.6% y/y from a revised 5.3% y/y a quarter earlier.

Key Quotes

“Industrial production shrank for the first time in two years, while manufacturing PMI has stayed deeply below 50.0 since April 2018. The Turkish central bank’s monetary tightening is putting an additional brake on economic expansion in 2019.”

“Private consumption expanded 1.1% y/y, which is the lowest growth in two years. Durable goods consumption plummeted 23.9% y/y and semi-durable goods consumption fell 4.5% on rocketing inflation and loans rates. Non-durable goods and services were up. We expect private consumption to slow further down in H1 19.”

“We expect 2018 GDP to grow 3.5% y/y, cutting our 2019 GDP growth projection to 1.1% y/y (previously 1.8% y/y) and keeping our 2020 GDP growth projection at 2.1%. We see that risks of technical recession in 2019 remain elevated.”

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