The growth figure for the third quarter is likely to be negative and around 0.5%, meaning that the Turkish economy is contracting for the first time since mid-2009. Moreover, a series of indicators point to a continued slowdown thereafter. The latest data comes as a strong indication of economic contraction in the third quarter from July to September 2016. In the first nine months of 2016, Turkey’s exports declined almost 3% and as of end of September, it also saw a one-third decline in tourism revenue. Besides the weakening tailwinds from the consumer side, the foreign direct investments (FDIs) front provides no impetus as well. The steep investments decline in the past several years shows no sign of improvement in the third quarter of 2016. The slowdown in the inflow of foreign capital and most recently, the fluctuations caused by the outcome of the US presidential elections, have proven devastating.
State and explain how the slowdown in the inflow of foreign capital would impact the Turkish Lira (Turkish currency) and its subsequent impact on Turkey’s real Gross Domestic Product.