Turkey’s economy cooled in the first quarter of this year as the central bank moved to tighten monetary policy to deter risks related to the Iran war.
Gross domestic product only expanded 0.1% in the first quarter from the previous three months on a seasonally-adjusted basis, data on Monday showed. That’s down from 0.4% in the prior three months and worse than every estimate in a Bloomberg survey of economists, whose median was for 0.3% expansion.
On an annual basis, GDP growth reached 2.5% in the first quarter, compared with 3.4% in the preceding period.
The data come as Turkey faces renewed risks from the conflict in Iran, a shock that has pushed up energy-market volatility and complicated the Turkish central bank’s efforts to curb inflation. Turkey imports most of its oil and natural gas, making the economy particularly vulnerable to higher global energy prices.
The central bank reversed its easing cycle earlier this year and raised a key interest rate to contain market volatility stemming from a broader selloff in emerging markets assets.
Last month, the monetary authority sharply revised its year-end inflation target to 24% from 16%, citing elevated energy and food prices. Prior to Monday’s GDP reading, some global banks suggested that the policymakers may consider raising rates in June. The next rate-setting meeting is scheduled for June 11.
“We had thought that pressure on the lira from a higher energy import bill, as well as the political turmoil a few weeks ago, would prompt the central bank to raise policy rates at next week’s MPC meeting. We haven’t dropped that forecast, but the decline in oil prices since late last week and this GDP release make such a move somewhat less likely,” William Jackson, chief emerging markets economist at Capital Economics, wrote in a note.
Disclaimer: This report is auto generated from the Bloomberg news service. ThePrint holds no responsibility for its content.