Turkey: Economy gathers steam in Q3
December 10, 2015
Turkey’s economy surprised analysts in the third quarter, expanding 4.0% over the same quarter of the previous year. The result overshot market expectations of a 2.7% expansion and was an improvement from Q2’s 3.8% increase. In addition, Q3’s figure marked the fastest expansion since Q1 2014.
Q3’s acceleration reflected a strong restocking process and an improvement in the contribution from the external sector. Growth in private consumption decelerated from 5.5% in Q2 to 3.4% in Q3. Government spending recorded the fastest expansion in one year and a half, jumping 7.8% annually (Q2: +7.2% year-on-year), mainly reflecting the pre-election period. Although fixed investment declined 0.5% in Q3 (Q2: +9.7% yoy), total investment accelerated to 3.8% (Q2: +1.5% yoy) on the back of a sizeable restocking process.
In the external sector, exports of goods and services fell 0.6% in Q3, which was a less pronounced contraction from Q2’s 1.9% decline. Imports also dropped, declining 1.0% annually, which contrasted Q2’s 1.5% increase. Since the deterioration in imports outpaced exports, the external sector’s net contribution to overall growth swung from minus 1.0 percentage points in Q2 to plus 0.2 percentage points in Q3.
A quarter-on-quarter analysis does not corroborate the acceleration suggested by the annual figures. GDP rose 1.4% over the previous quarter in seasonally- and calendar-day adjusted terms. The reading was slightly below the 1.4% increase observed in Q2.