Turkey entered recession for the first time since 2009, according to data released on Monday, bad news for the government at three weeks of municipal elections.
Gross Domestic Product (GDP) contracted 3 percent in the fourth quarter of 2018 year-on-year, according to the National Bureau of Statistics (Tüik), and 2.4 percent from the previous quarter.
However, in the third quarter already, GDP had already fallen by 1.1%, which means that Turkey has entered recession, a first since 2009. A recession is defined by two consecutive quarters of decline in GDP.
Growth for the full year of 2018 was 2.6%, compared with 7.4% in 2017.
This slowdown is largely due to very strong inflation against the backdrop of the turkish lira crisis in August, due to diplomatic tensions between Ankara and Washington and the market’s distrust of the Turkish government’s economic policies.
The Turkish currency has lost nearly 30% of its value in 2018, but has stabilized since the beginning of the year. A dollar was trading Monday around 9:00 GMT against 5.44 pounds.
Inflation held steady at 19.67% year-on-year in February, but was below the symbolic 20% mark for the first time since August.
The publication of the latest figures comes in full campaign for the municipal elections of March 31, and could serve the party of President Recep Tayyip Erdogan, while the economy appears at the top of the concerns of the Turks.
“The worst (…) is behind us,” said Finance Minister Berat Albayrak on Twitter, blaming the bad numbers on “speculative attacks” and the slowdown in the global economy.
A finding that seems to share Jason Tuvey, economist at Capital Economics, which estimates in a note that “the worst of the decline is probably past.” However, he estimates that Turkish GDP will contract a contraction of 2.5% in 2019.