A score of data this week will reveal the latest shape of Türkiye’s economy and its trade, clouded by the global headwinds and recession risks flagged in its major export markets.

Data on Wednesday is likely to show that the Turkish economy lost some pace but remained buoyant in the third quarter of this year after the central bank embarked on an easing cycle to counter an economic slowdown spearheaded by soaring inflation.

The Turkish economy bounced back strongly from the COVID-19 pandemic to expand by 11.4% in 2021. It grew 7.5% in the first quarter and 7.6% in the second, extending its hot streak on strong domestic demand and exports.

But the economy was set to cool in the rest of the year as both domestic and foreign demand eased, partly due to a slowdown in the main trading partners hurting exports.

The gross domestic product (GDP) is expected to have expanded by around 4% in the July-September period, according to surveys.

The GDP growth was expected to stand at 4% year-over-year in the third quarter, according to the median estimate of 13 economists participating in a Reuters poll on Monday. Forecasts ranged between 3.% and 4.8%.

A survey by private broadcaster Bloomberg HT and Anadolu Agency (AA) saw the figure at 4.2% and 3.9%, respectively.

Given the expected slowdown, the median estimate of 13 economists in the Reuters poll for GDP growth in 2022 stood at 5%, in a range of 4.5% and 5.6%. The other two surveys see overall growth at 5.3% and 5.2%, respectively.

Ankara expects a 5% growth this year and in 2023.

The Turkish government over the last 14 months prioritized low interest rates to boost exports, production, investment and create new jobs as part of an economic program, dubbed the Türkiye Economy Model, which aims to lower inflation by flipping the country’s chronic current account deficit to a surplus.

Türkiye is almost completely dependent on imports to cover its energy needs, which leaves it vulnerable to rising costs that skyrocketed following Russia’s invasion of Ukraine, and domestic demand has risen after the coronavirus pandemic.

An easing cycle last year led the Turkish lira to end the year down 44% against the U.S. dollar and it shed another 29% this year.

The Central Bank of the Republic of Türkiye (CBRT) has delivered a cumulative 500 basis points rate cut since August that saw its benchmark one-week repo rate drop to 9% last week from 14%, the level it was kept at in the first seven months.

It cited signs of an economic slowdown for its easing.

A separate official data next Monday is expected to show that annual inflation has started to ease, after it rose an annual 85.5% through October, driven by a surge in food prices and high energy costs.

Officials have blamed the inflation on high commodity costs, mainly caused by the war in Ukraine, as well as other external factors.

The central bank expects inflation to drop to 65.2% by end-2022, thanks largely to base effects in December.

In an interview with Daily Sabah last week, Treasury and Finance Minister said the downward trend in inflation was expected to start soon, supported by normalization in energy and commodity prices, as well as improvement in expectations, stability in the lira, government subsidy and tax policies and the so-called base effect.

"Starting from January, the decline process will accelerate, and we expect this decline to continue throughout 2023," Nebati said.

Separate data this Friday is likely to show that as one of the main drivers of Türkiye’s growth this year, exports have remained robust in November, after hitting a record-high volume throughout the first 10 months.

Yet, the outlook is overshadowed by conditions in Europe, the country’s largest market, where demand is expected to weaken even further in the coming period. The risk was affirmed by recent data that showed demand in Türkiye’s key export markets continued to weaken in October.

Türkiye’s exports rose 15.4% from January through October this year to $209.5 billion, according to official data, marking an all-time 10-month high. Türkiye has set a $250 billion (TL 4.65 trillion) export target for this year, after reaching a record $225 billion in 2021.

Trade Minister Mehmet Muş last week said there has been a slowdown in the growth trend of exports, citing weakening demand in the European Union, where almost half of the Türkiye’s shipments go.