Turkish business association sees 4.1 pct economic contraction
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ISTANBUL - A leading Turkish business association Tuesday revised its economic contraction expectation to 4.1 percent from an earlier 1.9 percent as the impact of a lack of an agreement with the International Monetary Fund, or IMF, strengthens.
The Turkish Industrialists' and Businessmen's Association, or TUSIAD, said in its "Conjuncture Assessment Report", issued Tuesday, in the previous report issued in January it had forecast a contraction of 1.9 percent on the assumption of an imminent IMF agreement.
The central bank has reduced interest rates by a total of 700 basis points since November, to bring its overnight borrowing rate to 9.75 percent and its lending rates to 12.25 percent, historic lows for the benchmarks, to provide stimulus to the slugging economy which shrank 6.2 percent in the fourth quarter, its first contraction since 2001.
"The fact that no step has been taken so far (on an IMF agreement) negatively affected the fundamental indicators for 2009. The economic contraction will be more severe as a result of the revisions in light of the latest data as of April 2009," TUSIAD said in the report.
"It is assumed that the agreement with the IMF will be finalized in the coming period. Therefore the magnitude of the economic contraction will be reduced after the second quarter," the report forecast.
Year-end inflation is assumed to be in line with the central bank expectation which stand at 6.5 percent, TUSIAD added.