Fitch cut Turkey’s growth forecast for next year by two-thirds and warned that its prediction was subject to considerable uncertainty as the country struggles with a currency crisis. The ratings agency lowered its estimate for growth in the NATO member to 1.2 percent from 3.6 percent previously, according to a statement reported by the Financial Times (paywall) on Tuesday. It lowered its forecast for an expansion this year to 3.8 percent from 4.5 percent. Turkey’s economic indicators are deteriorating rapidly as a slump in the value of the lira curtails spending power and hurts consumer and business confidence. Imports have shrunk in August as the lira’s slide of more than 40 percent this year made the goods more expensive to purchase. The risks to Fitch’s forecast included policy missteps, possible capital flight, heightened stress for the country’s indebted private sector and geopolitical tensions, the FT said, citing the report. Turkey is embroiled in a political spat with the United States over its internment of Americans including pastor Andrew Brunson. Sanctions by Washington against Ankara, which began on Aug. 1, spurred a 25 percent decline in the lira in August alone. Turkey's government responded with sanctions of its own. Earlier on Tuesday, ABN Amro forecast an economic recession in the country starting from the fourth quarter. The economy will contract 5.5 percent annually in the first three months of 2019 and a further 5 percent in the second quarter of the year, it said. The government has boosted economic growth to more than 8 percent on average in the nine months ending in March through a raft of incentives, but analysts say the measures threaten economic overheating and a hard landing. Fitch downgraded Turkey's debt further into junk territory in July warning of economic and financial risks. Professor Stephen Hanke, a prominent economist and currency specialist, said in an interview for Ahval TV that President Recep Tayyip Erdogan's government had "no credibility" left and called for a currency board to steady the lira and tackle inflation, which has surged. Other economists say the government should apply to the International Monetary Fund for emergency lending. Erdogan, who says Turkey's economy is strong, has ruled out an IMF program and is seeking finance from other countries including Qatar to help boost growth and steady the lira. Economists assert that the money won't be enough and comes without the condition of urgent structural reforms that Turkey needs to take such as ensuring central bank independence and helping indebted firms.
Turkey 's economic growth forecast for 2019 has been lowered from 3.6 % to 1.2 % by finance agency Fitch . turkey is struggling with a currency crisis , as a slump in the value of the lira diminishes spending power and hits inflation and business confidence . Fitch also lowered the country 's 2018 inflation forecast by 10 percentage points to 3.8 % .