ISTANBUL—The Turkish economy, hit hard by the coronavirus pandemic, contracted sharply in the second quarter, jeopardizing President Recep Tayyip Erdogan’s central political pledge of rapidly reviving the nation’s economic prosperity.
Turkey’s output shrank 9.9% in the second quarter compared with the same period a year earlier, and 11% compared with the first quarter of 2020, the national statistical agency said on Monday. Turkey suffered from the near paralysis of global air travel, which left its resorts starved for tourists, and monthslong lockdown measures imposed across the European Union, which disrupted exports of its automobile and other manufactured goods.
The Turkish government expressed satisfaction that the country’s gross domestic product contracted relatively less than in certain major economies. “Contrary to pessimistic statements, our GDP showed good results compared to other countries,” Turkish Finance Minister Berat Albayrak said in a tweet, predicting a V-shaped recovery. “The foundations of Turkey’s economy are robust and dynamic,” he said.
Economists, however, warned that turbulent months lie ahead.
The main concern is that Turkey, which remains highly dependent on overseas funding, has alienated many of the foreign investors who helped Mr. Erdogan transform the once economic minnow into a regional powerhouse during the first decade of his 18-year rule. By keeping its benchmark interest rate below inflation, the Turkish central bank has discouraged investment in assets denominated in Turkish lira, causing record selloffs of Turkish bonds and stocks by foreign investors since the start of the year.