Turkey enjoyed rapid growth between July and September as the government encouraged a lending spree that came at the cost of a plunge in the lira.
Gross domestic product expanded 15.6 per cent compared with the previous quarter as it bounced back from its deepest downturn, a dive triggered by measures aimed at curbing the spread of coronavirus.
Third-quarter growth was 6.7 per cent, compared with a year earlier, driven by household consumption, imports and investment.
Turkey’s authorities responded to the pandemic by cutting the country’s already low interest rates and pumping the economy with cheap credit. Loan growth reached its highest level since 2013.
The credit drive helped keep struggling businesses afloat, but stoked inflation and a widening current account deficit. Monday’s statistics showed that imports grew by almost 16 per cent cent year on year in the third quarter, while exports shrank by more than 22 per cent.
The trade deficit put further pressure on the lira, which hit a succession of record lows in August and September, and extended its slide in the fourth quarter of the year.
At the start of November, president Recep Tayyip Erdogan sacked the central bank governor. His replacement raised the bank’s benchmark interest rate in an effort to halt the currency’s downward spiral, a move that is expected to tame domestic demand and lead to slower growth in the final months of this year.