Turkey: Economy picks up in Q2
September 10, 2015
Turkey’s economy gathered steam in the second quarter, expanding 3.8% over the same quarter of the previous year. The result overshot market expectations of a 3.5% expansion and was a notable improvement from Q1’s revised 2.5% increase (previously reported: +2.3% year-on-year). In addition, Q2’s figure marked the fastest expansion in over one year.
Q2’s acceleration reflected stronger domestic demand, while the external sector’s drag on growth moderated. Growth in private consumption accelerated from 4.6% in Q1 to 5.6% in Q2, thus recording the best result since Q4 2013. Government consumption also rose to a 7.2% expansion in Q2 (Q1: +2.5% yoy). In addition, fixed investment improved notably from a meagre 0.4% expansion in Q1 to a robust 9.7% increase in Q2, the largest expansion since Q3 2011.
In the external sector, exports of goods and services contracted 2.1% in Q2, which was a more pronounced contraction from Q1’s 1.1% fall and marked the worst result in 7 quarters. Imports also moderated, expanding 1.6% which was below Q1’s 3.9% increase. Since the deterioration in imports outpaced exports, the external sector’s net contribution to overall growth improved from minus 1.4 percentage points in Q1 to minus 1.0 percentage points in Q2.
A quarter-on-quarter analysis does not corroborate the acceleration suggested by the annual figures. GDP rose 1.3% over the previous quarter in seasonally- and calendar-day adjusted terms. The reading was below the revised 1.5% increase observed in Q1 (previously reported: +1.3% qoq).