Turkey's economy contracted by 0.2% in the third quarter

Turkey's economy contracted by 0.2% quarter-on-quarter in the July-September period, the Turkish Statistical Institute said.

This comes after a decline of the same magnitude in the second quarter of the year, confirming that the economy is in recession.

In the third quarter, Turkey grew by 2.1% year-on-year, after reporting 2.4% in the April-June period, Euronews reported.

Household consumption contracted by 0.3% on a quarter-on-quarter basis and government consumption fell by 0.4%.

Compared to a year earlier, household consumption increased by 3.1% and government consumption fell by 0.9%. 

"At its meeting last week, the central bank expressed the view that domestic demand is slowing, and today's data supports that view," said Nicholas Farr, emerging Europe economist at Capital Economics.

"This could raise expectations that the central bank could cut interest rates as soon as its December meeting," he noted.

Inflation in Turkey is still high, reaching 48.6 percent year-on-year in October. 

Far predicted that interest rate cuts are likely to start early next year.

The key interest rate has been stuck at 50% for 8 consecutive months, which reduces consumption.

Imports of goods and services also declined 9.6% y/y in the third quarter, allowing Turkey to improve its trade deficit. | BGNES