Turkey confident of slow recovery

Istanbul: Turkey's central bank expects the recovery in economic activity to be slow and gradual in the period ahead, with a lasting improvement in employment conditions seen taking a long time, it said Tuesday.

The Turkish economy went into a deep recession in the first half, shrinking 10.5 per cent, and is expected to contract 6 per cent in the year, as a whole, with economic indicators yet to show significant signs of recovery.

The central bank said in its Financial Stability Report, published twice a year, that continuing demand uncertainty and low capacity utilisation would continue to limit investment expenditure.

"Hence, it is expected that the recovery in economic activity in the period ahead will show a slow and gradual trend," the report said.

Underlying inflation indicators were expected to remain low, even if there are temporary rises due to base factors, it said.

Annual consumer price inflation stood at a 40-year low of 5.08 per cent in October, compared with an official year-end target of 7.5 per cent.

The central bank has cut its benchmark overnight borrowing rate by a total 10.25 percentage points since November last year in a bid to revive economic activity, which tumbled in line with global trends amid the financial crisis.

It has signalled that the rate-cutting cycle is approaching an end.

The report also said the development in the coming period of the country's current account deficit -- an economic weak point in recent years