Turkish economy grows 5.9 percent in third quarter

ANKARA

Turkish economy grew by a more-than-expected 5.9 percent in the third quarter of 2023 from a year earlier, with GDP growth accelerating from 3.9 percent in the three months to June, data from the Turkish Statistical Institute (TÜİK) have shown.

“We have seen the positive effects of the disinflation program we are implementing on the financial markets,” Finance Minister Mehmet Şimşek said, commenting on the growth data.

Investor confidence increased, the country’s risk premium declined, international capital inflows began, reserves strengthened and exchange rate volatility decreased, Şimşek added.

“We are moving towards a more balanced growth in line with our program’s predictions,” Şimşek said, noting that private consumption contracted compared with the previous quarter, while investments and exports increased.

Final consumption of households rose by 11.2 percent year-on-year in the August-September period, slowing from the 15.4 percent increase in the second quarter of the year.

The share of households’ consumption in GDP declined from 61.5 percent in the second quarter to 57.2 percent in the third quarter.

The annual growth in fixed gross capital formation accelerated from 5.6 percent to 14.7 percent, while the year-on-year increase in the government’s final consumption slowed from 6.1 percent to 5.3 percent.

The construction sector grew 8.1 percent in the third quarter, after expanding 6.6 percent in the previous quarter. The agriculture sector’s output rose 0.3 percent.

Production in industry, which contracted 2.7 percent in the second quarter, rose by 5.7 percent in the July-September period.

The quarter-on-quarter GDP growth on a seasonally and calendar adjusted basis, however, slowed from 3.3 percent to 0.3 percent, TÜİK data also showed.

Meanwhile, the Organization for Economic Cooperation and Development (OECD) estimated in its latest Economic Outlook report that the Turkish economy will grow 4.5 percent in 2023 before slowing to 2.9 percent in 2024 and 3.2 percent in 2025.

Tighter financial conditions, subdued economic sentiment and stubbornly high inflation will moderate household consumption, according to the Paris-based organization.

“However, investment growth will remain elevated due to ongoing reconstruction activity following the earthquakes at the beginning of this year,” it said.

Exports will gain traction in 2025, reflecting stronger global growth, while inflation is projected to decline over the projection period but will remain considerably high, it added.