May 12, 2019 / 11:10 AM / a month ago

Turkish finance minister hopes damage to economy from currency crisis will be short-lived

ISTANBUL (Reuters) - The Turkish economy will hopefully overcome the impacts of a currency crisis last year with just two quarters of contraction, Turkey’s Finance Minister Berat Albayrak said on Sunday.

A merchant counts Turkish lira banknotes at the Grand Bazaar in Istanbul, Turkey, March 29, 2019. REUTERS/Murad Sezer

Speaking to broadcaster CNN Turk, Albayrak referred to Turkey’s performance during the 2008 global financial crisis when the economy contracted for four consecutive quarters.

“Turkey will get over this period hopefully with two quarters (of contraction) and with minimum negative impact,” Albayrak said.

“The first quarter data year-on-year and when compared to last quarter, technically rebalancing, recovery process will extend more than two quarters.”

The Turkish economy contracted 3.0 percent year-on-year in the fourth quarter of 2018, after a currency crisis knocked some 30 percent off the value of the lira last year. Economists expect two more quarters of contraction year-on-year.

The lira has lost as much as 15 percent against the dollar this year, with the latest weakness driven by investor concerns over Monday’s decision to re-run a mayoral election in Istanbul that had been narrowly won by the main opposition party.

Turkey’s central bank moved to tighten policy by funding the market through a higher rate and took additional liquidity steps, while state banks sold dollars to boost the local currency.

Albayrak said Turkish inflation and employment will improve this year, while the government will implement necessary reforms without hesitation.

“Turkey, especially inflation and employment, will reach a better, more balanced place till the end of 2019,” Albayrak said.

The meeting between the finance minister and U.S. President Donald Trump was constructive, hopeful and positive, Albayrak said, adding that Trump will most probably pay a visit to Turkey in July.

Reporting by Ezgi Erkoyun; Editing by Elaine Hardcastle

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