Skip to main content

Turkey's economy sinks into recession

Financial media say the Turkish economy is in recession, and Turkey refuses to renew the press cards of three German journalists.
People queue to buy vegetables at a tent set up by the Ankara metropolitan municipality in the Cankaya district of the Turkish capital, on February 13, 2019. - Confronted with persistently high inflation more than a month before local elections, Turkish authorities this week set up stands to sell vegetables at unbeatable prices in a bid to force markets to lower their prices. (Photo by Adem ALTAN / AFP)        (Photo credit should read ADEM ALTAN/AFP/Getty Images)

ANKARA, Turkey — The Turkish economy sank into recession in the fourth quarter of 2018, according to figures released by the national statistics authority March 11. The news is highly inconvenient to President Recep Tayyip Erdogan, who is campaigning vigorously for March 31 municipal elections in which voters are expected to express their anger over the soaring cost of food.

TurkStat said the fourth-quarter contraction was 3% year-on-year, and 2.4% from the previous quarter. By the seasonally adjusted, quarterly measurement, the economy also contracted in the third quarter of 2018 (by 1.6%), meaning that Turkey has suffered the two consecutive quarters of negative growth that characterize a recession.

However, a senior economics official told Reuters that the government preferred the year-on-year measurement of contraction. As the economy grew by 1.8% year-on-year in the third quarter, it seems the government will wait to see what happens to GDP in the first quarter of this year before officially assessing whether Turkey is in recession.

However, financial media had no such hesitation. Bloomberg headlined a headlined a story on the topic: “Turkey Enters First Recession in a Decade as Elections Loom.” It quoted Julian Rimmer, a London trader with Investec Bank, as saying: “This is an indictment of Erdo-nomics and a direct consequence of a monetary policy in 2018 conducted in the interests of short-term political expediency rather than economic pragmatism.”

The Financial Times said the country had entered recession at the end of 2018 “as a collapse in the lira and a sharp hike in interest rates brought economic growth to a halt."

Finance Minister Berat Albayrak was upbeat about the figures. “The worst is behind us,” he tweeted.

Albayrak, who is Erdogan’s son-in-law, said the economy had survived “the most serious speculative attack in history."

“The current data for 2019 show the economy is making a rapid recovery. The decline in growth is temporary,” he added.

However, economist Cem Oyvat was not so sanguine. He told Al-Monitor the latest data indicate growth will be negative in the current quarter, year-on-year. If that transpires, Turkey will be in recession even by the government’s definition.

Oyvat said he was looking at two pointers: First, the purchasing managers’ index (PMI), which is a measure of business confidence based on surveys of manufacturers. Second, loans to the non-financial sector, which means what banks lend to everybody except other banks and financial institutions.

The London-based information provider Markit says the purchasing managers' index for Turkish business confidence was 44.2 in January and 46.4 in February.

A purchasing managers' index “below 50 is usually considered as a sign of an economic recession,” Oyvat said. He said that although February’s index “shows signs of a slight recovery, it still shows signs of an ongoing recession.”

When it comes to what banks are lending outside the financial sector, Oyvat said the figures show such loans declined by 8.6% between Aug. 3 and March 1 in US dollars. And non-financial loans were 20.3% lower in the first week of March compared with the first week of March 2018.

“The drop suggests that businesspeople either do not have access to credit or are choosing not to invest,” Oyvat said.

Surveys of consumer credit reveal a similar pattern: “Consumers either cannot afford to buy or are choosing not to buy in conditions of recession,” said Oyvat, who lectures at the University of Greenwich in London.

In a separate development, two German journalists flew home Sunday after Turkey refused to renew their press cards. They accused Ankara of trying to muzzle the foreign press.

German Foreign Minister Heiko Mass told the media that Turkey’s action against Thomas Seibert of Tagespiegel newspaper and Joerg Brase of ZDF television was “not compatible with our understanding of press freedom.”

The day before their departure, Germany strengthened its travel advisory for Turkey. The new advisory used language that is rare for notices that usually warn citizens about the dangers of terrorist attacks and conflict.

The advisory said statements that would be "covered by the German legal understanding of the freedom of expression can lead in Turkey to occupational restrictions and criminal proceedings.” 

A third German journalist, Halil Gulbeyaz, who reports for NDR broadcasting and spends more time in Germany than in Turkey, was also told his press card would not be renewed.

All three reporters received an email from the communications department of the Turkish presidency March 1 saying their applications for 2019 press cards had been rejected. The letters gave no reason.

At a press conference in Istanbul before heading to the airport, Seibert and Brase said they were at a loss to explain why they had been singled out.

Their effective expulsion — as the denial of press accreditation meant they had no chance of extending their residence permits — comes at a time when it was thought that Turkey was trying to improve relations with Germany. In September, Erdogan paid a state visit to Germany and opened a beautifully designed mosque in Cologne.

“The Turkish government has managed to more or less silence the national media,” Brase told the press conference. “They’re now trying to do it with the international media, and we should not submit to that.”

Brase, who came to Turkey in January 2018 as bureau chief for ZDF, said Turkey’s move would “cause more damage for Turkey than it does for us.”

When Al-Monitor asked Brase what he meant, he replied it would harm Turkey’s image and referred to the strengthening of the travel advisory.

Seibert said he would go on reporting about Turkey from outside the country. “I’ve been here for 22 years,” he told the press conference, “of course I’m not going to stop now.”

Two Turkish legislators criticized the withdrawal of the Germans’ press cards, including a member of Erdogan’s Justice and Development Party (AKP).

“This decision tarnishes Turkey's credibility,” said Mustafa Yeneroglu of the AKP. “I neither comprehend nor approve of the decision.”

The presidency’s press office received a written request for a response to Brase’s comment about silencing the media, but it did not reply.

Join hundreds of Middle East professionals with Al-Monitor PRO.

Business and policy professionals use PRO to monitor the regional economy and improve their reports, memos and presentations. Try it for free and cancel anytime.


The Middle East's Best Newsletters

Join over 50,000 readers who access our journalists dedicated newsletters, covering the top political, security, business and tech issues across the region each week.
Delivered straight to your inbox.


What's included:
Our Expertise

Free newsletters available:

  • The Takeaway & Week in Review
  • Middle East Minute (AM)
  • Daily Briefing (PM)
  • Business & Tech Briefing
  • Security Briefing
  • Gulf Briefing
  • Israel Briefing
  • Palestine Briefing
  • Turkey Briefing
  • Iraq Briefing

Premium Membership

Join the Middle East's most notable experts for premium memos, trend reports, live video Q&A, and intimate in-person events, each detailing exclusive insights on business and geopolitical trends shaping the region.

$25.00 / month
billed annually

Become Member Start with 1-week free trial

We also offer team plans. Please send an email to and we'll onboard your team.

What's included:
Our Expertise AI-driven

Memos - premium analytical writing: actionable insights on markets and geopolitics.

Live Video Q&A - Hear from our top journalists and regional experts.

Special Events - Intimate in-person events with business & political VIPs.

Trend Reports - Deep dive analysis on market updates.

All premium Industry Newsletters - Monitor the Middle East's most important industries. Prioritize your target industries for weekly review:

  • Capital Markets & Private Equity
  • Venture Capital & Startups
  • Green Energy
  • Supply Chain
  • Sustainable Development
  • Leading Edge Technology
  • Oil & Gas
  • Real Estate & Construction
  • Banking

Already a Member? Sign in

Start your PRO membership today.

Join the Middle East's top business and policy professionals to access exclusive PRO insights today.

Join Al-Monitor PRO Start with 1-week free trial