Turkey’s economy grows 3.8 percent year-on-year, exceeds forecasts

ANKARA

Turkey’s gross domestic product (GDP) grew a higher-than-expected 3.8 percent year-on-year in the second quarter, a surprisingly positive move as opposed to an expected second-half slowdown in growth, according to data from the Turkish Statistics Institute (TÜİK).

The GDP grew by 3.15 percent in the first half of the year after a revision in the first quarter data from 2.3 percent to 2.5 percent. 

A rise in public expenditures ahead of the upcoming election and some recovery in domestic demand as well as in the agricultural sector enabled the Turkish economy to overcome some losses in exports, according to analysts. Some slowing-down in growth is, however, expected in the coming months amid rising political uncertainties. 

Turkey’s exports decreased 8.1 percent in the first half of the year to $73.26 billion from the same period of 2014, due to the negative effects of parities on exports and geopolitical risks in neighboring countries, according to data from the Turkish Exporters’ Assembly (TİM).

Household final consumption expenditures increased by 12 percent and reached 329.2 billion Turkish Liras at current prices and increased by 5.6 percent and reached 21.3 billion liras at constant prices in the second quarter of 2015 compared to the same quarter of the previous year, according to the TÜİK data. 

Government final consumption expenditures increased by 17.2 percent and reached 72.4 billion liras at current prices and increased by 7.2 percent and reached 3.5 billion liras at constant prices in the second quarter of 2015 compared to the same quarter of previous year, the data showed. 

Deputy Prime Minister Cevdet Yılmaz, who is responsible for economic affairs, said the GDP grew upon rising domestic demand, but contraction in net foreign demand limited the growth in the second quarter of the year, as was the case in the first quarter. 

“Turkey’s economy continued on its non-stop positive growth trend in the second quarter of the year since the last quarter of 2009,” he said in a written statement, as quoted by Reuters. 

He noted the added value of the industrial sectors, including the constructions sector, grew by 4.1 percent in the second quarter, despite negative foreign economic conditions. 

The added value of the services sector also grew by 2.2 percent, he said. 

Risks over 4 pct growth target

“The added value of the agricultural sector grew by 6.7 percent in the second quarter of the year compared to the same period of 2014 due to the base effect and positive weather conditions. We saw a GDP growth mainly upon domestic demand in the second quarter as we did in the first quarter. The sales in automotive, home appliances and housing supported both production and consumption in the economy,” he said. 

Finance Minister Mehmet Şimşek noted there was a negative risk for the medium-term growth target of 4 percent, although key indicators suggested a continuation of moderate GDP expansion, in a statement, as quoted by Anadolu Agency.      

“However, strong sales trends in some key sectors such as automotive, housing and home appliances indicate that the economy continues to expand, even if at a moderate pace,” Şimşek said.

Net export decline pulled down growth by 1.2 percentage points in the first half of the year due to the global economic slowdown, while the contribution of domestic demand to growth was 4.4 percentage points, Şimşek said.

“Investment is being postponed due to political uncertainty. Volatility in the global financial markets, rising geopolitical tensions as well as recession in the EU has limited Turkish economic growth in the first half of the year,” Şimşek noted.

Economy Minister Nihat Zeybekci said the economy will reach growth levels at around 5 percent once the slowing exports make a positive contribution again in a written statement.