Turkish economy grew 3.8% y/y in Q2, beating the market consensus forecast of 3.5%, the statistics institute TUIK announced on September 10. The economy has grown by a revised 2.5% in the first quarter while H1 GDP growth stood at 3.1%.

The markets were expecting a more moderate growth in the second quarter, however, Turkey showed a better than expected performance although deterioration in preliminary indicators and on-going political tensions still keeps pessimistic estimations for the remaining of the year.

On the production side, services sector, which accounts to 58.4% of the economy in real terms, grew 4.1%, thanks to the significant growth rates achieved by financial services and insurance (9.1% growth in Q2, 12.6% share in overall GDP), wholesale and retail trade (2.6% growth in Q2, 13% share in overall GDP) and transportation (2.3% growth in Q2, 12.6% share in total) industries. Industrial production, which accounts to 34.6% of the economy in real terms, also grew 4.1% while manufacturing industry (25.9% share in overall GDP) grew 5% and construction output (5.9% share in total) grew 2% in the quarter. Agricultural production also showed a 6.7% growth in Q2 and took a 7.3% share in overall GDP.

On the consumption side, private consumption (65.6% share in Q2 in real terms) growth accelerated to 5.6% in the second quarter from 4.6% in Q1 while government consumption (11% share) growth jumped to 7.2% from 2.5%. Gross fixed capital formation (25.8% share) growth also jumped to 9.7% in the quarter from 0.4% a quarter ago, thanks to significant 11.4% growth in private sector’s investments (21.8% share in overall GDP). Exports (26.2% share in overall GDP), on the contrary, declined 2.1% in Q1.

Calendar-adjusted GDP growth stood at 3.8% y/y in Q2 while seasonally and calendar-adjusted growth stood at 1.3% q/q, TUIK data also showed. TUIK also calculated per capita GDP at $10,390 in the quarter.

Commenting on Q2 GDP data, Finance Minister Mehmet Simsek said on September 10 in a written statement that overall GDP growth in 2015 will possibly come below the government target of 4% due to political uncertainties and unfavorable conditions in the export markets, however, Turkish economy will continue moderate growth trend in the remaining quarters of the year.