Turkey’s economy grows 5 percent in first quarter of 2017, exceeds forecasts

Turkey’s economy grows 5 percent in first quarter of 2017, exceeds forecasts

Turkey’s economy grows 5 percent in first quarter of 2017, exceeds forecasts Turkey’s gross domestic product (GDP) growth rate increased by five percent in the first quarter of 2017 compared to figures in the same period last year, data from the Turkish Statistical Institute (TÜİK) showed on June 12. 

The growth forecast for the country was four percent. A rebound in domestic demand and exports played a key role in pushing up the economic growth, according to TÜİK. 

Government officials have praised the higher-than-expected economic growth, noting that a further growth would be seen through the realization of reforms. 

Calendar adjusted gross domestic product increased by 4.7 percent while seasonally and calendar adjusted gross domestic product was increased by 1.4 percent compared with the previous quarter, according to TÜİK data. 

Reforms ‘to fuel further growth’

Exports of goods and services increased by 10.6 percent, while imports of goods and services increased by 0.8 percent in the first quarter of 2017.

“That appears, in part, to have been a result of the weakness of the lira supporting the competitiveness of goods exports,” said William Jackson, senior emerging markets economist at Capital Economics in London, as quoted by AFP. 

The lira has lost over 20 percent against the dollar over the last year, although it has rallied slightly in recent months. Imports however increased only 0.8 percent.

Deputy Prime Minister Mehmet Şimşek said some 2.8 percentage points of the 5 percent growth came from domestic demand and 2.2 percentage points from net exports, noting that the economy would see a further growth through reforms. 

“Turkish economic growth will be stronger in second quarter than in the first,” he said in an interview with private broadcaster NTV following the launch of the growth data. 

“The increase in the short term is driven by measures that we took and by foreign conjuncture partially. I think the most important point is that confidence is back in the market again. We will reinforce it through reforms. Hopefully, Turkey will follow a growth path of 5 percent and above again,” he said.        

Surging domestic demand, exports

Household final consumption expenditure increased by 5.1 percent, government final consumption expenditure increased by 9.4 percent and gross fixed capital formation increased by 2.2 percent, TÜİK also said. 

Finance Minister Naci Ağbal said 2.2 percent increase in investments in the first quarter would continue to further back the growth thanks to the maintenance of political and economic stabilities and ongoing economic measures. 

“Net exports made a positive contribution to the economy in the first quarter, rebounding from its negative impact over the GDP growth last year. In addition to this, private consumption spending will continue to support the economic growth in the upcoming quarters with the contribution of recent tax cuts,” he added. 

Gross domestic product with production method increased by 14.3 percent, reaching 641 billion 584 million liras at current prices, according to TÜİK. 

The total value added increased by 3.2 percent in the agricultural sector, 5.3 percent in the industry sector, 3.7 percent in the construction sector and 5.2 percent in the services sector (wholesale and retail trade, transport, storage, accommodation and food service activities) compared to the same quarter of 2016 in the chained linked volume index, TÜİK stated.