The Turkish economy grew 4.4% y/y in Q3 after expanding 4.5% y/y in the previous quarter. The markets had expected a GDP growth of 4.05% (Reuters poll).
The statistics institute revised Q2 growth to 4.5% from 4.4%, it did not revise last year’s figure. On a seasonally & calendar adjusted basis, GDP grew 0.9% q/q in the third quarter. Turkey’s GDP, which grew 2.2% last year, expanded 4% y/y in the first nine months of the year.
On the production side: Output growth in the agriculture sector declined to 2.9% in Q3 from 5.6% in Q2 but manufacturing activity gained momentum. Manufacturing output rose 4.9% y/y versus a 3.7% in Q2. Output growth in the construction sector accelerated to 8.7% y/y in Q3 from 7.6% in the previous quarter. The wholesale & retail trade expanded 5.5% y/y, slightly higher than the previous quarter’s 5.1% y/y. The financial intermediation activities expanded 11% y/y in Q3 after growing 8.5% y/y in Q2.
On the consumption side: Households’ final consumption (which accounts for 68% of GDP) increased 5.1% y/y in Q3 after rising 5.6% y/y in Q2. Government expenditures, which rose 7.8% y/y in Q2, increased only 0.6% y/y. Gross fixed capital formation was up 6% y/y, comparing favourably with the 4% increase in the previous quarter. Public sector’s investments (4.1% share in GDP) rose 9.1% in the third quarter. Public sector investments soared nearly 84% y/y in Q1 and increased 38% y/y in Q2. Private investments (14.5% share in GDP), which fell 1.9% y/y in Q2, rose 5.3%. Foreign trade did not help. Exports declined 2.2% in the third quarter after a 0.1% y/y increase in Q2 while the rate of import growth eased to 6% y/y in Q3 from 12.1% in Q2.
Concerned about widening current account deficit, the government announced several measures to limit loan growth and to control credit card usage. Finance minister Mehmet Simsek acknowledge that these measures would affect consumption and consequently GDP growth but he says their impact will be seen only in the short term.
The government cut its growth forecast for 2013 to 3.6% from a previous 4% and to 4% from a previous 5% for 2014.
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