Turkey’s Economy Contracted by 10% in Q2

Data showed that Turkey’s economy shrank 9.9% in Q2 of the year, as the general lockdown due to the Coronavirus pandemic caused an almost complete halt of economic activities, representing the worst performance on an annual basis in ten years.

According to the Turkish Statistical Institute, the decline in GDP, although not as severe as expected, is still historical compared to Q1, as it reached 11% at an adjusted rate in light of seasonal and calendar factors. These data had little impact on the Lira, which fell slightly against the dollar, recording 7.34 per dollar.

Turkey’s economy grew in Q1 by 4.4% year-on-year, according to a slight revision from the initial estimate. The growth was driven by a lending boom before the coronavirus pandemic caused a sharp downturn that began in March.

The financial sector took the lead, growing by 28% in Q2, but the heavier manufacturing and services sectors contracted by 16% and 25%, respectively.

A Reuters poll of 14 economic experts estimated that, on average, the contraction in GDP would reach 11.8% on an annual basis, with expectations ranging between 7.1% and 13.1%.