The Turkish economy grew 5% y/y in Q1, picking up from the 3.5% rebound seen in the previous quarter after the 1.3% slump experienced in the third quarter of 2016, data from national statistics office TUIK showed on June 12.

The seasonally and calendar-adjusted GDP growth in Q1 measured 1.4% against the previous quarter.

Turkey’s economy was in the second half of last year hit by repercussions of the July coup attempt, a wave of terror attacks carried out by Kurdish militants and Islamic State, a sharp decline in tourism revenues linked to anxiety over possible further attacks and geopolitical tensions. In all, the GDP expansion in 2016 was 2.9%, a figure that pales against the 6.1% recorded in 2015.

During the first quarter of this year, and in advance of the campaign for the April 16 referendum that has paved the way for the introduction of an executive presidency with sweeping powers, the government introduced a set of measures to stimulate the economy and fuel GDP growth. Initial indicators pointed to a recovery in GDP as data confirmed that economic activity had speeded up in the first quarter.

The lira gained 0.49% d/d to trade at 3.5198 per dollar as of 10:30am local time on June 12. The main stock exchange index, the BIST-100, was up 0.15% to 99,090.

Households’ final consumption increased by 5.1% y/y in Q1 after expanding 5.7% y/y in the previous quarter, while government spending jumped by 9.4% y/y, following a 0.8% y/y increase in the final quarter of 2016. Gross fixed capital formation advanced 2.2% y/y in Q1, up from 2% y/y in the previous quarter.

Exports, which grew 2.3% y/y in real terms in Q4 of last year, increased by a stronger 10.6% y/y in the first quarter thanks to the depreciation of the Turkish lira while imports rose by 0.8% y/y in Q1 versus 3.3% in the previous quarter.

On the production side, the agriculture sector’s output increased by 3.2% y/y in Q1, after growing 1.3% in the previous quarter. The production of the industrial sector, which rose 5% y/y in Q4, was up 5.3% y/y in Q1 while manufacturing output rose by 5.1% y/y after growing 4.4% y/y in Q4. The construction sector’s output increased by 3.7% y/y in Q1, the same pace recorded in the fourth quarter.

Initial indicators for Q2 point to a further improvement in economic performance. The calendar-adjusted industrial production index moved up by 6.7% y/y in April, marking the best growth in output recorded since August 2015.

Foreign tourist arrivals rose by 18% y/y to 2.07mn in April, representing the first annual growth recorded since July 2014. Home sales in Turkey rose by 8% y/y units in April, following the 10% y/y growth registered in March.

The OECD very slightly hiked its 2017 GDP growth expectation for Turkey to 3.4% y/y in its June Economic Outlook forecast published on June 7 from the 3.3% anticipated in its November 2016 outlook.

The World Bank projects that the Turkish economy will expand by 3.5% in 2017, supported by accommodative fiscal policy. The European Commission increased its 2017 GDP growth outlook for Turkey to 3% in its spring 2017 forecast from the 2.8% anticipated in its winter 2016 forecast issued in February.

The EBRD projects GDP growth in Turkey will moderate to 2.6% in 2017.

The size of the economy was $857bn in current prices last year vs $861bn in 2015, while per capita income in 2016 was $10,807.