Turkey grew 4 percent in 2013, above expectations thanks to last quarter performance
Gross domestic product (GDP) reached 122.3 billion Turkish Liras over the year, amounting to a 4 percent overall growth rate. DHA PhotoThe Turkish economy grew at an annual rate of 4 percent in 2013, according to official data released on the morning of March 31.
The figure is slightly higher than expected due to a surprisingly strong fourth quarter performance when the economy expanded by 4.4 percent, the Turkish Statistical Institute (TÜİK) stated.
Gross domestic product (GDP) reached 122.3 billion Turkish Liras over the year, amounting to a 4 percent overall growth rate.
“We recorded strong growth despite the negative conjecture. We managed to grow above our 3.6 percent forecast in the medium term program,” Finance Minister Mehmet Şimşek said in a written statement released after announcement of the data.
“This performance was achieved despite the increased financial volatility sourced by the Fed’s switch to monetary tightening; global, regional and political tensions; the contraction in our biggest trade partner EU and high-proceeding oil prices,” Şimşek added.
Both analysts and top economy officials in the government have been predicting a strong growth near 4 percent, but the real surprise was the firm GDP growth recorded in the fourth quarter.
In his remarks, Şimşek stressed that the most important source of that growth was domestic demand.
“Domestic demand contributed 6.4 points to growth throughout 2013 and 7.4 points in the last quarter of the year,” he said, noting that the biggest contribution came from private consumption.
Worries also grow
The government forecast 2013 growth to be 3.6 percent and 2014 growth to be 4 percent in its medium-term program, but both the government and analysts are increasingly worried about this year’s growth.
In a separate statement released to evaluate growth figures, Deputy Prime Minister Ali Babacan said this year’s domestic demand growth would be slightly slower than predictions, adding that he was more optimistic that foreign demand would be stronger than it was at the beginning of the year.
The factors that pose downward risks to domestic demand, as well as the changing foreign conjecture, have been major sources of concern in conjunction with turbulent politics.
The macro-prudential measures taken by the country’s banking watchdog will lead to a slowdown in consumption, while the tight monetary policy of the Central Bank will take its toll on both consumption and investment, eventually leading to a decline in overall growth, ING Bank Economist Muammer Kömürcüoğlu said in a statement.
With the aim of raising the domestic savings rate and reducing the nation’s dependence on foreign capital to finance consumption, the Banking Regulation and Supervision Agency imposed hikes on loan downpayments and limited installment payments with credit cards in February.
Adding to the pressures of indebted individuals and companies, the corruption scandal, which began with the December 2013 arrest of three ministers’ sons and businessmen close to Erdoğan, has undermined confidence in the outlook for growth, helping send the lira to record lows and triggering a huge hike in interest rates in January to defend the currency.