İş Investment foresees contraction .hurriyet2008-detailbox-newslink { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:none; color:#000000;} .hurriyet2008-detailbox-newslink:hover { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:underline; color:#990000;} ISTANBUL - İş Investment, one of Turkey's leading financial intermediary corporations, released its "2009 Strategy Report," which foresees a 1.5 percent decline in gross domestic product next year.

Turkey's economy will not be "relaxed" next year, said the report. Presenting the report to journalists in Istanbul yesterday, İş Investment Research Director Serhat Gürleyen said: "There is no disaster scenario for Turkey, but we are not optimistic on growth. We expect the economy to shrink 1.5 percent next year.

"We expect the Central Bank keep cutting interest rates and pull it as low as 13.5 percent next year," said Gürleyen. "The recent interest rate cut was the best thing that the Central Bank could do. This has been a tranquilizer while the economy is stagnating."

No room for expansion
According to the report, Turkey has faced the global financial crisis in its strongest period. While the public side and banking system is resistant against external shocks, the dependence on the European economy and the high amount of short-term foreign debt of the private sector increases the effects of the crisis on Turkey, said the report.

"The global financial crisis is expected to hit Turkey not via the public sector or the banking system, but from the companies that are highly indebted with foreign exchange. Those companies will be the soft-belly of Turkey's economy," said Gürleyen.

In case the government makes a deal with the International Monetary Fund, or IMF, depending on the global decline in commodity prices and on economic stagnation, Turkey's current account deficit is expected to be lower than $20 billion next year, said the report.

While the economy is expected to shrink next year, focusing on fixed-yield investment tools would be better rather than investing in growth-sensitive equities, the report noted, also indicating that bonds may be a profitable investment tool for the next year.

The global economy is expected to normalize by 2011, according to the report. İş Investment also emphasized the fact that Turkey is not able to implement an expansionary financial policy due to the structure of its economy.