Turkey's Q4 GDP grows 3.5% y/y boosting gov't ahead of referendum

By bne IntelliNews March 31, 2017

Turkey’s economy rebounded from its slump in the third quarter of 2016 with GDP expanding at 3.5% in Q4, data from national statistics office TUIK showed on March 31.

The fourth-quarter figures are better than what was anticipated. Analysts expected the economy to grow at just 2.3%. 

TUIK also revised the Q3 contraction to 1.3% y/y from the previously stated 1.8% y/y. That helped the full-year 2016 growth figure of 2.9% to also beat the expectations of the economists, who had forecast a 2.2% expansion.

The better-than-expected growth figure will give the government political ammunition it can use in its hard battle to win a Yes vote in the upcoming April 16 referendum on constitutional changes that would introduce an executive presidency with sweeping powers.

“The economic recovery is broad-based, driven by household consumption and investment spending,” said Deputy PM Mehmet Simsek, commenting on the latest figures. “The measures undertaken by the government have worked. Economic recovery will probably gain further momentum from the second half of Q2,” he added.

Seasonally and calendar-adjusted output in Q4 rose 3.8% from the previous quarter.

Turkey’s economy was last year hit by the repercussions of the July coup attempt, terror attacks carried out by Kurdish militants and Islamic State, the sharp decline in tourism revenues linked to anxiety over possible further attacks and geopolitical tensions. The 2.9% GDP expansion seen in 2016 pales against the 6.1% of growth recorded in the previous year.

TUIK said the size of the economy was $857bn in current prices last year vs $861bn in 2015, while it calculated the per capita income at $10,807 for 2016.

The lira gained 0.32% on March 31 to trade at 3.6410 per dollar as of 11:00am local time. The main stock exchange index, the BIST-100, was up 0.28%.

Households’ final consumption increased by 5.7% y/y in Q4 after contracting 1.7% y/y in the previous quarter, while government spending rose 0.8% y/y, slowing from the 5.6% y/y increase in Q3. Gross fixed capital formation advanced 2% y/y in Q4, up from 0.5% y/y in the previous quarter.

Exports, which plunged 9.3% y/y in Q3, increased by 2.3% y/y in the final quarter while imports rose by 3.3% y/y in Q4 versus 2.1% in the previous quarter.

On the production side, the agriculture sector’s output increased by 1.3% y/y in Q4, after having contracted in the previous three quarters. The production of the industrial sector, which declined 0.8% y/y in Q3, was up 5% y/y in Q4 while manufacturing output rose by 4.4% y/y after falling 2.6% y/y in Q3. The construction sector’s output increased by 3.7% y/y in Q4, easing from 4% y/y in the third quarter.

“The data are unlikely to have much impact on monetary policy. However, at the margin, today’s data may make it easier for the [the central bank’s] Monetary Policy Committee to resist President Erdogan’s calls for interest rates to be lowered,” William Jackson at Capital Economics wrote on March 31 in an emailed comment.

Gross Domestic Product, Breakdown by Sector
 
Year

Percentage change compared to same period in previous year    (%)

 Quarter
 
I II III IV
Annually
Agriculture, forestry and fishing 2015 6.5 8.8 16.3 -3.6 9.1
2016 -4.3 -4.0 -6.5 1.3 -4.1
  2015 0.8 5.4 3.8 9.6 5.0
Industry 2016 8.1 6.0 -0.8 5.0 4.5
Manufacturing 2015 2.6 5.7 4.0 10.7 5.9
2016 7.7 6.3 -2.6 4.4 3.9
Construction 2015 -2.1 9.4 3.7 7.9 4.9
2016 5.4 16.0 4.0 3.7 7.2
Services 2015 7.1 8.2 4.8 6.6 6.6
2016 2.0 0.5 -7.4 1.8 -0.8
           
Information and communication 2015 0.7 2.1 0.1 10.9 3.9
2016 4.8 7.5 2.7 9.1 6.3
Financial and insurance activities 2015 9.0 12.5 7.3 2.4 7.7
2016 8.6 13.5 -1.3 8.4 7.1
Real estate activities 2015 3.5 2.1 2.1 1.8 2.4
2016 4.1 4.6 3.0 2.7 3.6
Professional, administrative and support service activities 2015 14.1 10.0 16.5 19.9 15.3
2016 7.4 12.9 2.1 1.3 5.6
Public administration, education, human health and social work activities 2015 -0.8 4.1 0.8 4.8 2.2
2016 4.7 5.0 5.2 3.1 4.5
Other service activities 2015 -0.4 0.3 -1.7 1.3 -0.1
2016 2.6 1.6 0.1 3.8 2.1
Sectoral total 2015 3.2 6.3 5.6 7.0 5.6
2016 4.7 5.3 -1.5 3.3 2.8
Taxes-subsidies 2015 6.3 14.0 7.4 10.3 9.5
2016 2.8 4.8 1.0 4.9 3.4
Gross domestic product (purchaser's price) 2015 3.5 7.2 5.9 7.4 6.1
2016 4.5 5.3 -1.3 3.5 2.9
Source: TUIK

 

 

 

 

 

 

 

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