The Turkish economy continued to expand rapidly in the third quarter, but analysts warned that the growth rate was unsustainable given the rapid rise in inflation and the depreciation of the lira.

Strong household consumption boosts GDP Grow Compared with the same period in 2020, the growth rate between July and September was 7.4%.

Government spending and the export boom also contributed to the expansion, with exports increasing by nearly 26% year-on-year.

These data, following the 22% annual growth rate in the second quarter of 2021, will be welcomed by Turkish President Recep Tayyip Erdogan, whose political wealth is generally considered to be the same as that of the country. The economic performance of $795 billion is related.

Both the Turkish government and independent forecasting agencies expect the overall GDP growth rate in 2021 to be approximately 9%-this growth rate may be one of the fastest growth rates in the world.

Jason Tuvey of Capital Economics, a consulting firm, said the Turkish economy was “really developing at a high speed” in the third quarter.

But he warned that given the sharp depreciation of the lira, this fast-paced expansion is unlikely to continue. Since Erdogan ordered the central bank to cut interest rates in September, the exchange rate of the lira against the US dollar has fallen by more than 30%.

“Turkey is still in a currency crisis, and we expect that some of the more harmful effects of the sharp currency devaluation may gradually disappear,” Tuvey said. He expects an economic downturn in the last quarter of this year or the first few months. 2022.

“Although the weak lira may support net trade, it may severely affect domestic consumption. As inflation rises and household incomes fall, consumption may fall back.”

This view has been endorsed by investment bank Goldman Sachs. “Anecdotal evidence suggests that the recent depreciation of the lira has caused damage to economic activity,” its analysts wrote in a report released to clients before the data release on Tuesday.

Erdogan who holds high interest rates leads to unorthodox views inflation Although the annual inflation rate has climbed to nearly 20%, the central bank has not cooled down in the past three months, but has cut interest rates three times.

The Turkish President pursues rapid growth at all costs, which has led to repeated high inflation and financial turmoil in recent years. In the previous crisis, he was forced to accept a large interest rate hike to restore stability. This has had an impact on growth.

However, this time, Erdogan insisted that he would not raise interest rates. In his speech last week, he stated that he would not tolerate high interest rates “overwhelming our people and farmers” and added that borrowing costs would fall further.

The Turkish President argued that the weak lira would boost exports, investment and employment. Economists say that even if some parts of the strategy succeed, they will come at the cost of soaring inflation, which could severely reduce the standard of living.