The Turkish economy grew at a slower pace after the central bank hike

Published: November 30, 2023 3:36 am ET

By Ed Frankl

The Turkish economy slowed in the third quarter, likely the result of a contraction in spending spurred by higher central bank interest rates.

Gross domestic product rose 0.3% in the July-September quarter, on a seasonally and calendar-adjusted basis, to 3.3% in the second quarter.

By Ed Frankl

The Turkish economy slowed in the third quarter, likely the result of a contraction in spending spurred by higher central bank interest rates.

Gross domestic product rose 0.3% in the July-September quarter, according to data from the country’s statistics office Turkstat released on Thursday. Compared to the same quarter of the previous year, the economy expanded by 5.1%.

The lower growth rate comes after Turkey’s central bank pursued a more conservative monetary policy, raising its interest rate from 8.5% in May to 40% in November.

„With the central bank set to keep interest rates on hold in the coming quarters, growth is likely to slow further in 2024, which should help reduce current account deficit and inflationary pressures,” says Liam Beach, economist at Capital Economics. In a research note.

Inflation, which stood at 61.3% in October, remains a concern for the country, although the central bank signaled earlier this month that monetary tightening is easing as borrowing costs are closer to what is needed to keep inflation down.

Beech said Turkish GDP is likely to contract in the fourth quarter, given the central bank needs to provide more evidence that the economy is slowing, demand is weakening and the economy is restructuring.

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Write to Ed Frankl at [email protected]

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