|
Turkey's GDP Grew 0.5% in Quarter |
 |
 |
 |
|
Written by The Wall Street Journal
|
|
Tuesday, 16 December 2008 08:07 |
|
Turkey's economy slowed to a near halt in the third quarter, raising the risk of a recession as the government gets ready for fresh loan talks with the International Monetary Fund.
Turkish gross domestic product expanded by 0.5% in the third quarter from the year-earlier period, the slowest rate in six years, the statistical office said. That rate came after a 2.3% annual expansion in the second quarter and 6.7% annual growth in the first three months of the year.
The agency also said the unemployment rate rose to 10.3% in the three-month period of August-October, from 9.8% in July-September.
The slowing growth makes it likely that the central bank will cut its 16.25% policy interest rate, the highest inflation-adjusted real rate of any major economy, when its monetary-policy committee meets Thursday. The inability of small and medium-size enterprises to take out loans is leading to job cuts and lower exports, the State Planning Organization said last week.
Trends in the fourth quarter point to a further deterioration, with industrial production down 8.5% in October from a year ago and exports sinking fast. Tax receipts are declining, while public spending increases. The Turkish economy could post a negative number for the full year in 2009, said Timothy Ash, head of emerging-market research at the Royal Bank of Scotland.
This "obviously raises big question marks over official budget projections for 2009 and adds weight to calls for the government to quickly sign up to a new funding agreement with the IMF," he said.
The IMF has required tough fiscal measures in exchange for emergency loans it has extended recently to Iceland, Ukraine, Hungary and Latvia.
Turkish Treasury figures showed budget spending rose 23% on the year in November, while revenues fell 5% from November 2007. The figures cast doubt on the government's spending plans for next year, which assume 4% GDP growth and a 16% jump in tax revenue. |