Turkish private consumption likely to decelerate further in H1 2019

Turkish GDP growth had recorded a sharp deceleration in the third quarter of this year, slowing down to 1.6 percent year-on-year from a revised 5.3 percent year-on-year in the prior quarter. The industrial production contracted for the first time in two years, while manufacturing PMI has remained deeply below 50.0 since April 2018. The monetary tightening of Turkish central bank is exerting an additional brake on economic growth.

Private consumption grew 1.1 percent year-on-year, which is the lowest growth in two years. Durable goods consumption fell 23.9 percent year-on-year and semi-durable goods and services dropped 4.5 percent on rocketing inflation and loans rates. Non-durable goods and services were up. According to a Danske Bank research report, private consumption is expected to further decelerate in the first half of 2019.

“We expect 2018 GDP to grow 3.5 percent y/y, cutting our 2019 GDP growth projection to 1.1 percent y/y (previously 1.8 percent y/y) and keeping our 2020 GDP growth projection at 2.1 percent. We see that risks of technical recession in 2019 remain elevated”, added Danske Bank.