Turkish economy grew 5.2 pct in Q2, driven by private consumption

Turkish economy grew 5.2 pct in Q2, driven by private consumption

Turkish economy grew 5.2 pct in Q2, driven by private consumption

The Turkish economy grew by 5.2 percent in the second quarter of this year compared with the same period last year, the country’s statistical authority announced Sept. 10. 

The Turkish Lira firmed to 6.47 against the dollar after the data from around 6.4850 beforehand.

Second quarter gross domestic product (GDP) expanded a seasonally and calendar adjusted 0.9 percent from the previous quarter, data from the Turkish Statistical Institute (TÜİK) showed.

The highest contribution to the growth again came from domestic consumption - mainly private - in the second quarter, according to calculations.

The TÜİK report showed private consumption, which is estimated to make up nearly two-thirds of the economy, grew 6.3 percent on an annual basis during the second quarter of the year, slowing from a revised 9.3 percent in the first quarter. The contribution of this item to the GDP was 3.8 points, according to calculations.

On the other hand, government spending on consumption rose 7.2 percent from a revised 4.9 percent in the previous quarter. Its share rose to 1 point from 0.7 points in the first quarter.

Gross fixed capital formation rose 3.9 percent, while the share of this item regressed to 1.2 points in the second quarter from 2.3 points in the first quarter, according to calculations.

With a 4.5 percent increase in exports, the share of exports to growth rose to 0.96 percent.

Treasury and Finance Minister Berat Albayrak said growth in the second quarter was kept being driven by domestic consumption despite a moderate slowdown in consumption and investments.

“In addition to this, we have seen that strong export and tourism performances enabled net foreign demand to have made a positive contribution to the growth,” he said, adding that “this outcome has shown that Turkey’s economy has entered a rebalancing period in line with the government’s targets.”

He noted that initial indicators showed that the slowdown in domestic demand has been intensified.

“We expect a higher positive contribution by net foreign demand to the growth thanks to robust export and tourism revenue and a decrease in demand for imports,” Albayrak added.

Slowdown in agriculture, ease in construction

When the activities which constitute gross domestic product were analyzed, the total value added decreased by 1.5 percent in the agricultural sector, increased by 4.3 percent in the industry sector, 0.8 percent in the construction sector and 8 percent in the services sector (wholesale and retail trade, transport, storage, accommodation and food service activities) compared to the same quarter of the previous year in the chained linked volume index, according to TÜİK data.

According to calculations, the share of construction sector to the Turkish GDP was 0.06 points in the second quarter, the lowest since early 2015.

Meanwhile, Turkey topped the list among OECD member countries and came second among EU members who have so far announced their annual growth performances for the second quarter, according to state-run Anadolu Agency.

According to a Reuters poll, the economy is expected to grow 3.3 percent in the year as a whole amid a collapse in the Turkish Lira.

The official data also showed that the economy expanded 7.4 percent in 2017, matching previously released data.

“In 2017, the manufacturing industry had the largest share [in GDP] with 17.6 percent,” it said.

“Manufacturing industry was followed by wholesale and retail trade and construction industry with 11.9 percent and 8.6 percent, respectively.”

The institute noted that services of households as employers had the lowest share in GDP.