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Turkey has chopped its annual growth forecasts in another blow to an economy hit by falling tourist revenues and persistent security concerns.
The Turkish government said GDP growth would hit just 3.2 per cent this year, from an earlier forecast of 4.5 per cent – marking its weakest year of expansion since 2014. Growth projections for 2017 were also trimmed to 4.4 per cent from 5 per cent.
Turkey has been hit by a severe fall in tourist numbers this summer after the government of President Recep Tayyip Erdogan quashed a military coup attempt in July. Mr Erdogan has since announced the extension of the country’s “state of emergency” by another 90 days, allowing the government to rule by decree.
The lira has now fallen to 10-week low against the dollar to its weakest since late July.
Rating agency Moody’s cut Turkey’s sovereign rating into junk last month, citing heightened risk to the country’s external funding needs and a weakening in its “institutional strength”.
Turkey’s central bank has cut interest rates seven times this year in a bid to prop up growth despite inflation persistently overshooting its 3-7 per cent target.