The forecast cut follows Moody's recent downgrade of Turkey's sovereign debt to non-investment grade ("junk") status and the Turkish lira coming under renewed pressure, on Tuesday alone losing 4.4 percent against the dollar, pushing close to an all-time low. The Standard and Poor's ratings agency also downgraded Turkish debt in July, soon after the failed coup attempt. 

Tuesday's forecast was the first set of figures released by the government in Ankara since the attempted coup.

Speaking in Ankara, Prime Minister Binali Yildirim accused ratings agencies of having an "unfair attitude" towards Turkey. He also predicted improvements after the current calendar year, predicting 2017 economic growth of 4.4 percent and forecasting a return to 5-percent growth rates for 2018-19. 

Tourism has fallen sharply following extremist attacks earlier in the year, which economists believe has hit Turkey's GDP growth in 2016.

Turkey's tourism sector also suffered major losses as Russia imposed a travel ban on its citizens - a response to Turkey shooting down a Russian jet that had been operating over Syria. Those restrictions were largely lifted in late June, and wholly lifted by the end of August. Tourism makes up 4.4 percent of the country's GDP and the 40 percent fall in foreign visitor numbers has had a major impact on the economy.

The government is also faced with the classic dilemma of stimulating growth as consumer demand wanes, while keeping an eye on inflation, even as it fell slightly to 7.3 percent in September. Yildirim predicted inflation would be 7.5 percent for the full year of 2016, before dropping to 6.5 percent in 2017 - although that's still comfortably outstripping the government's growth forecasts, which does not bode well for consumer spending power in the near future.

jbh/msh (AFP, dpa)