Turkey's economy is expected to shrink this year for the first time in more than a decade as the COVID-19 pandemic and related restrictions hit demand, according to a Reuters poll published on Friday.
The median forecast in a July 21-23 survey of 42 economists in and outside the country was for a contraction of 4.3% in 2020, with drops in the second and third quarters of 12.2% and 3.1% respectively. However, the Turkish economy is expected to grow next year by 4.5%, according to the median forecast.
"We are seeing a U-shaped recovery in the Turkish economy right now ... However, the uncertainties about a possible second wave of the outbreak necessitates a cautious approach to these economic recovery scenarios," said Enver Erkan, economist at Tera Yatirim.
There are downside risks to growth next year, Erkan said, adding that tensions between the US and China will have an impact too.
"I am not saying everything will be alright in 2021, we will be in a process of changing back," he noted.
The government had forecast 5% economic growth this year before the virus outbreak and has since maintained the economy could still grow this year, following a robust 4.5% expansion in the first quarter.
But economic activity declined sharply in the second quarter as Ankara shut schools and some businesses, closed borders and adopted weekend lockdowns to slow the spread of the coronavirus. It has started taking steps to re-open the economy since June.
Turkey's economy last contracted on an annual basis in 2009, by 4.7%. From 2010 to 2018, its average growth rate was more than 5%, mainly due to a construction boom driven by cheap capital following the global financial crisis.
According to Reuters, a currency crisis in 2018 was set off by concerns over central bank independence and tensions between Ankara and Washington. That led to three straight quarters of economic contraction and a modest annual growth rate of 0.9% last year.
