Turkey's economy grew 4.5pc in first quarter, before pandemic hit

• Construction, which drove growth in recent years, contracted 1.5% year-on-year in the January-March period, the data showed.
• Reflecting the downturn, Turkey's April trade deficit surged 67% year-on-year to $4.56 billion.

ISTANBUL: The Turkish economy grew a slower-than-expected 4.5pc, year-on-year in the first quarter of 2020, propelled by a lending spree just before the coronavirus pandemic brought on a sharp downturn beginning in March, official data showed on Friday.

A Reuters poll had forecast annual growth at 5.4%. Compared with the fourth quarter of 2019, gross domestic product expanded at a seasonally and calendar-adjusted 0.6%, according to the Turkish Statistical Institute.

Analysts say fallout from the pandemic will bring a downturn through midyear - the second in as many years for Turkey's economy - though growth in January and February could soften the blow.

Construction, which drove growth in recent years, contracted 1.5% year-on-year in the January-March period, the data showed.

A measurement of services recorded the highest growth rate at 12.1% year-on-year, followed by information and communication with 10.7% and industry with 6.2%.

After a 2018 currency crisis, Turkey emerged from recession last year. Growth surged to 6% in the fourth quarter, driven mainly by credit and an aggressive monetary easing cycle in which the central bank cut rates by 1,575 basis points since July.

In an effort to slow the spread of the new coronavirus, Turkey in March closed its borders, halted flights and imposed weekend lockdowns, all of which led to declines in trade, tourism and domestic demand. Some factories also temporarily halted.

Reflecting the downturn, Turkey's April trade deficit surged 67% year-on-year to $4.56 billion, with a 41.4% fall in exports and 25% fall in imports, data also showed.

Government officials say the economy could still eke out positive GDP growth this year, while some others see a contraction, including the International Monetary Fund, which expects a 5% slump. In 2019, Turkey grew 0.9pc.