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ISTANBUL—The Turkish financial system, hit exhausting by the coronavirus pandemic, contracted sharply within the second quarter, jeopardizing President Recep Tayyip Erdogan’s central political pledge of quickly reviving the nation’s financial prosperity.
Turkey’s output shrank 9.9% within the second quarter in contrast with the identical interval a yr earlier, and 11% in contrast with the primary quarter of 2020, the nationwide statistical company mentioned on Monday. Turkey suffered from the close to paralysis of world air journey, which left its resorts starved for vacationers, and monthslong lockdown measures imposed throughout the European Union, which disrupted exports of its vehicle and different manufactured items.
The Turkish authorities expressed satisfaction that the nation’s gross home product contracted comparatively lower than in sure main economies. “Contrary to pessimistic statements, our GDP showed good results compared to other countries,” Turkish Finance Minister Berat Albayrak mentioned in a tweet, predicting a V-shaped restoration. “The foundations of Turkey’s economy are robust and dynamic,” he mentioned.
Economists, nonetheless, warned that turbulent months lie forward.
The foremost concern is that Turkey, which stays extremely depending on abroad funding, has alienated most of the overseas buyers who helped Mr. Erdogan rework the as soon as financial minnow right into a regional powerhouse in the course of the first decade of his 18-year rule. By holding its benchmark rate of interest beneath inflation, the Turkish central financial institution has discouraged funding in belongings denominated in Turkish lira, inflicting document selloffs of Turkish bonds and shares by overseas buyers for the reason that begin of the yr.
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