GDP in Turkey
Turkey - GDP
Economy contracts in Q1 on collapsing domestic demand
As widely expected, national accounts data showed that the economy continued to shrink in the first quarter of the year, contracting 2.6% year-on-year (Q4: -3.0% year-on-year); however, the contraction was less severe than market analysts had expected, as a surge in pre-election government expenditure cushioned the fall somewhat. Moreover, in quarter-on-quarter seasonally-adjusted terms the economy expanded 1.3% (Q4: -2.4% quarter-on-quarter), following three consecutive contractions, thereby exiting the recession.
Domestic demand continued to crumble year-on-year in the quarter. Household expenditure dropped 4.7% over the same quarter a year prior; although this marked an improvement from the fourth quarter’s 8.9% decrease, it was still the second-largest contraction in nearly a decade. Consumers continued to feel the pinch from a tumbling lira, which lost nearly half its value compared to the first quarter of last year, and a consequent rise in inflation amid increasing unemployment and still-depressed consumer sentiment. Fixed investment also fell at the sharpest rate in almost a decade, contracting 13.0% year-on-year, down slightly from the prior quarter’s 12.9% drop. On the other hand, public consumption surged in the quarter, growing by 7.2% over the same period a year prior (Q4: +3.6% yoy) as the government ramped up spending ahead of the 31 March local elections.
Collapsing domestic demand owing to a significantly weaker lira also affected the external sector’s performance, which cushioned the contraction somewhat. Exports of goods and services rose 9.5% year-on-year in the quarter, which was down from the 10.6% expansion in the prior quarter; however , imports of goods and services dropped at an accelerated pace of 28.8% year-on-year (Q4: -24.4% yoy), marking the strongest decrease in a decade as foreign goods and services became noticeably more expensive.
Looking ahead, however, the economy is expected to remain in a tough spot, although a rebound is expected towards the end of the year. The weak lira, which is seen losing yet more ground against the greenback and the euro this year, still-high inflation and rising unemployment will continue to depress domestic demand. On the other hand, government consumption is likely to have grown at a steady pace in the second quarter against the backdrop of a re-run of the Istanbul mayoral election, which President Erdogan’s AK party lost first time around. The annulment of the Istanbul election results, which was seen as another attack on the country’s democratic institutions, will keep markets jittery.
Turkey GDP Forecast
FocusEconomics Consensus Forecast panelists see GDP contracting 1.0% in 2019, before expanding by 2.9% in 2020.
Turkey - GDP Data
|Economic Growth (GDP, annual variation in %)||8.5||5.2||6.1||3.2||7.4|
5 years of economic forecasts for more than 30 economic indicators.
Turkey GDP Chart
Source: Statistical Institute and FocusEconomics calculations.
|Bond Yield||15.89||-0.09 %||Jun 20|
|Exchange Rate||5.76||-0.85 %||Jun 20|
|Stock Market||94,158||1.41 %||Jun 20|
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June 24, 2019
After a brief stint in pessimistic territory in May, business confidence among Turkish firms moved back into optimistic territory, suggesting that the dip in confidence was influenced by the cancellation of the Istanbul mayoral election.
June 20, 2019
Sentiment among Turks remained deeply rooted in pessimism despite a rise in the consumer confidence index from 55.3 in May to 57.6 in June; May had marked the lowest point since the survey began in 2004.
June 18, 2019
The second quarter started off on the wrong foot for the Turkish industrial sector with output falling 4.0% year-on-year in April.
June 14, 2019
Turkey recorded a USD 1.3 billion current account shortfall in April, a noticeable narrowing from the USD 5.6 billion deficit recorded in April 2018 and better than the USD 1.5 billion gap market analysts had expected.
June 12, 2019
At its 12 June meeting, the Monetary Policy Committee of the Central Bank of the Republic of Turkey (CBRT) decided to keep the one-week repo rate unchanged at 24.00% for the sixth consecutive meeting.