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Turkey lira CRISIS: ‘Clearest sign yet’ of evidence of Turkey RECESSION


Economists fear this is among the clearest signs yet that Turkey is headed for a deep recession after months of currency turmoil which has seen the value of the lira plummet.

The lira has tumbled a staggering 40 percent against the US dollar so far this year.

The crisis has been painful for residences with the cost of fuel and food subsequently soaring, further raising concern about the risk to banks and the broader economy.

Sources also suggest authorities have hiked electricity and natural gas prices for the third month running, adding even more woes for residents and businesses.

The currency crisis is rooted in concerns about President Tayyip Erdogan’s influence on the central bank, and being later worsened by escalating tensions with the United States.

Ankara has seen duties on aluminium and steel imported from Turkey doubled on orders by US President Donald Trump.

In response, President Erdogan hit goods imported from the United States with heavy tariffs, with extra duties on products including cars, alcohol and tobacco.

The Purchasing Managers’ Index (PMI) fell to its lowest since March 2009, the survey from Istanbul Chamber of Industry and IHS Markit showed.

This is believed to have been a result of a slowdown in output and new orders.

Liam Carson of Capital Economics said in a note to clients: “The sharp drop in Turkey’s PMI last month chimes with other very weak survey data and adds to the evidence that the economy has entered a deep recession.”

Inflation hit 18 percent last month, its highest in nearly 15 years.

It is expected to soar to 20 percent this year.

Turkey’s energy regulator raised electricity prices for residences by 9 percent and by 18.6 percent for industry from October 1, sources said, after the state-owned gas operator made a similar increase.

Shoppers have also felt the pinch, as retail prices in Istanbul went up by more than four percent in September from a month earlier, data showed.

Retail prices in Turkey’s biggest city were nearly 19 percent more expensive last month than they were in September 2017.

The government has responded to the crisis by cutting its growth forecasts for this year and next.

It has also pledged to tighten spending.

On a good note for the economy, exports climbed 22.6 percent year-on-year in September to $14.5 billion, the Trade Ministry said.

The trade deficit shrank 76.85 percent.

The most exported products were cars, with Germany, Britain and Italy the leading export destinations.

Turkey imported the most from Russia, China and Germany.



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