Turkey in 2nd spot with growth

Turkey in 2nd spot with growth

ISTANBUL - Hürriyet Daily News
Turkey in 2nd spot with growth

A Turkish worker assembles a heavy machine part in this photo. Manufacturing witnessed the most growth at 5.2 pct in the 4th quarter of 2011. DAILY NEWS photo

The Turkish economy grew 8.5 percent in 2011 overall, and 5.2 percent in the last quarter of the year, according to figures released yesterday by the Turkish Statistical Institute (TÜIK), hinting at a slowdown in the economy.

Turkey’s 2011 Gross Domestic Product (GDP) was recorded at 1.2 trillion Turkish Liras, or $772.2 billion, while per capita income came in at $10,444.

The reason behind Turkey’s robust growth was “confidence and stability,” according to Prime Minister Recep Tayyip Erdoğan.

Turkey grew the most after China last year and that with this level of growth there would be even more foreign direct investment as the current amount was insufficient, Erdoğan said in Ankara.
“Turkey’s 8.5 percent 2011 growth rate is a very positive result when you see that so many countries in Europe are struggling to even achieve 1 percent growth,” said Deputy Prime Minister Ali Babacan yesterday.

The country will grow 5 percent by the end of 2012, according to Economy Minister Zafer Çağlayan.
The results for the last quarter of 2011 show that the economy is experiencing a soft landing in a balanced fashion according to the government’s targets, Finance Minister Mehmet Şimşek told the Anatolia news agency. “While there is a slowdown in the growth of consumption and investment, the effects of our foreign trade on growth have been positive.” Şimşek said that in the first half of 2011, foreign trade had pulled Turkey’s growth down to 5.2 percent, it increased growth by 1.9 percent in the second half of the year. Şimşek expects to see 4 percent growth in 2012.

Number 3 in fourth quarter

“With these growth figures, for the fourth quarter we are number three in the world and probably number two in the world for the year as a whole after China,” added Turkey’s Industry Minister Nihat Ergün, who also predicts 4 percent growth for 2012.

Özgür Altuğ, chief economist at BGC Partners, however, expects only 2 percent growth in 2012. When looking at the details of the growth data revealed by TÜİK, Altuğ, said in an investor note that “When we look at growth figures for the fourth quarter of 2011 by sector, we see that the manufacturing (5.2 percent year-over-year growth), construction (7 percent), agriculture (6.7 percent), transportation (6.8 percent), and health (7.8 percent) sectors were the chief factors behind growth in the fourth quarter, while we should note that growth in all sectors was significantly lower compared to previous quarters.”
 “Despite the rise in consumption, imports contracted in the fourth quarter. The rise in consumption was 3.4 percent, while it stands at 5.2 percent for the private sector, but imports contracted by 5 percent,” Gülay Elif Girgin, economist at Oyak Investment, told Reuters.

“This is intriguing. We continue to foresee a 2 percent contraction in GDP for 2012, and foreign trade data for January and February support this. In line with global liquidity conditions, we will see a slowdown, a contraction this year,” she said.

Oil prices slow adjustment
“The problem with the Turkish economy is that it’s mainly consumption-based, so you want to have a re-balancing of the economy. In the latest figures you see some of this rebalancing, as the contribution of consumption to growth has decreased, but high oil prices are slowing down the adjustment process,” added economist Emre Deliveli.