The Turkish economy slipped into a recession at the end of 2018 as its GDP contracted for the second quarter in a row, on a quarterly basis, in the last three months of 2018.
Turkey's seasonally and calendar-adjusted GDP decreased by 2.4% in the fourth quarter of 2018, following a 1.6% contraction in the third quarter of 2018.
The technical recession, defined as two consecutive quarters of negative growth, was expected, according to ING Research, given the strong monetary and fiscal tightening seen in 2018.
The economy shrank 3% annually in the fourth quarter of 2018.
Private consumption expenditure decreased by 8.9% in the fourth quarter of 2018 compared to the year-ago period, and investments fell 12.9% over the period.
Challenging external financing conditions and monetary tightening, clubbed with deteriorating sentiment, weighed on domestic demand, especially on private consumption and investment, ING wrote.
The country is due to have local elections at the end of March.
To curb a fall in the currency, the Türkiye Cumhuriyet Merkez Bankası AS hiked its monetary policy rate to 24% from 17.75% in September 2018. President Recep Tayyip Erdoğan is known for his unorthodox economic view that lower interest rates would result in lower inflation, which was at nearly 20% in February.
For full year 2018, Turkish economic expansion slowed to 2.6% in annual terms from 7.4% in the previous year.