Turkish economy returns to growth in the third quarter

Turkey’s economy broke three consecutive quarters of contraction as it shook off the effects of recession following last year’s currency crisis. (AFP)
Updated 02 December 2019

Turkish economy returns to growth in the third quarter

  • Turkey’s economy grew 0.9 percent year-on-year in the third quarter
  • As the economy has recovered, inflation tumbled to single digits in October due to base effects

ISTANBUL: Turkey’s economy grew 0.9 percent year-on-year in the third quarter, in line with expectations, breaking three consecutive quarters of contraction as it shook off the effects of recession following last year’s currency crisis.
Compared to the second quarter, gross domestic product (GDP) expanded by a seasonally and calendar-adjusted 0.4 percent, its third positive quarter-on-quarter reading in a row, the Turkish Statistical Institute data showed.
A Reuters poll forecast the economy would expand 1 percent year-on-year in the third quarter. It also predicted that the economy will grow 0.5 percent in 2019 as a whole.
The major emerging market economy has a track record of 5 percent growth, but a near 30 percent slide in the lira’s value last year pushed up inflation and interest rates, while domestic demand tumbled.
The third quarter growth was driven by the agricultural sector which expanded 3.8 percent, while industry grew 1.6 percent and services grew 0.6 percent. The construction sector shrank 7.8 percent.
The lira was at 5.7435 against the dollar, weakening slightly from 5.74 beforehand.
As the economy has recovered, inflation tumbled to single digits in October due to base effects, and loan growth picked up thanks to central bank rate cuts. In the second quarter, the economy shrank a revised 1.6 percent year-on-year.
In late October, the central bank slashed its policy rate more than expected to 14 percent, continuing an aggressive bout of cuts from 24 percent since July to help revive the recession-hit economy.
The central bank governor subsequently said the bank had used a significant part of its leeway for loosening monetary policy. Last week, he said the bank will use required reserves to support real sector access to loans and loan growth.
Industrial production, a key signal of economic activity and widely regarded as an indication of growth, expanded 3.4 percent year-on-year in September.
The government’s own sharply lowered forecast for the year envisages growth at 0.5 percent in 2019, and 5 percent in 2020.


S&P downgrades trio of Dubai developers as pandemic hits property and retail

Updated 50 min 5 sec ago

S&P downgrades trio of Dubai developers as pandemic hits property and retail

  • Gulf states are being hit hard by the coronavirus pandemic that has come at a time of weak oil prices

RIYADH: The credit ratings of three Dubai property companies were downgraded by S&P as the coronavirus pandemic hits confidence in the retail and real estate sectors.
S&P Global Ratings reduced the credit ratings for the real estate developer Emaar Properties as well as Emaar Malls to +BB from -BBB with a negative forward outlook, adding that it sees a “weakening across all its business segments” in 2020. S&P also cut its rating for DIFC Investments to +BB from -BBB, while keeping a stable outlook.
Gulf states are being hit hard by the coronavirus pandemic that has come at a time of weak oil prices, heaping pressure on governments, companies and employees.
The ratings agency expects the emirate’s economy to shrink by 11 percent this year
“The supply-demand imbalance in the realty sector appears to have been exacerbated by the pandemic. We now expect to see international demand for Dubai’s property to be subdued, and the fall in residential prices to be steeper than we had expected, lingering well into 2021” S&P reported.
Despite easing restrictions and the opening of the economy, S&P said that overall macroeconomic conditions remained challenging.
Global travel restrictions and social distancing constraints “significantly weigh on Dubai’s tourism and hospitality sectors” the rating agency reported.
Still, Dubai’s tourism chief was upbeat on the emirate’s prospects when international tourism resumes.
“Once we do get to the other side, as we start to talk about next year and later on, we see very much a quick uptick. Because once things normalize, people will go back to travel again,” Helal Al-Marri, director general of Dubai’s Department of Tourism and Commerce Marketing told AFP in an interview.