Turkey’s GDP expanded 4% in the whole of 2013 with its size reaching USD 820bn last year. Per capita income increased to USD 10,782 last year from USD 10,459 in 2012. In Q4, the GDP growth rate accelerated to 4.4% y/y from 4.3% y/y in Q3. The market consensus for both Q4 and 2013 growth stood at 4%. Turkey’s 2013 GDP growth rate is slightly higher than the government’s forecast of 3.8%. The Turkish economy had expanded 2.1% in 2012.
Household consumption rose 5.3% y/y in the final quarter after increasing 4.7% in the previous quarter. Private consumption showed a 4.6% y/y increase in the whole of 2013 versus a 0.5% y/y contraction in 2012. Government’s consumption, that rose only 1.7% y/y in Q3, increased 6.8% y/y in Q4 while its gross fixed capital formation rate eased to 11.5% y/y in Q4 from 17.1% y/y in the previous quarter. The rate of private sector investment expansion quickened to 4.9% y/y from 3.6%. In the whole of 2013, private investments rose 0.7% y/y after they contracted 4.9% in 2012. Exports fell 1.5% y/y in Q4 while imports increased 9.3% y/y, according to data of the statistics institute.
On the production side; manufacturing output was up 4.9% y/y in Q4, the rate of output increase was also 4.9% in Q3. In the whole of 2013, the manufacturing production increased 3.8% y/y comparing favourably with the 1.7% y/y expansion recorded in 2012. The expansion rate in the construction industry eased to 6.2% y/y in the final quarter from 8.6% y/y in Q3. The construction industry’s output growth was 7.1% y/y in 2013 versus 0.6% y/y in the previous year. The wholesale & retail industry that expanded 5.4% in Q3, grew 6.2% y/y in Q4. The financial and insurance sector saw 12.7% y/y expansion in the final quarter that came on top of the 11% y/y growth in Q3.
The government expects the Turkish economy to expand 4% this year but the World Bank and IMF forecast a GDP growth of 3.5% in 2014. Domestic demand, consequently economic growth, is expected to slow this year because of the combination of several factors. QE tapering may lead to less capital inflow. The government has taken measures to curb credit growth to take the current account deficit under control but a weaker TRY can support growth given the recovery, though modest, in the EU, Turkey’s largest trade market.
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