ISTANBUL BLOG: Applause all round for stats bureau as Turkey posts official 1Q GDP growth of 5.7% y/y

ISTANBUL BLOG: Applause all round for stats bureau as Turkey posts official 1Q GDP growth of 5.7% y/y
/ bne IntelliNews
By Akin Nazli in Belgrade June 2, 2024

Turkey’s official gross domestic product (GDP) expanded by 5.7% y/y in Q1 versus 4% y/y in Q4 2023, the Turkish Statistical Institute (TUIK, or TurkStat), declared on May 31.

A 2.4% q/q official growth rate was also provided for Q1 versus 1.0% q/q a quarter ago.

It is not advisable to plan, price or draw inferences based on TUIK data. There is widespread concern about the reliability of Turkey’s official data series.

Last September, in his medium-term economic programme (OVP), finance minister Mehmet Simsek pencilled in a 2024 growth target of 4.0%.

In August, bne IntelliNews noted: “If Simsek could declare 'I created a recession', that would be the best thing in terms of marketing Turkey to the global finance industry. But Turkey’s president, Recep Tayyip Erdogan, would then very likely administer a slap to his shiny pate.”

This publication also added: “The TUIK will be found downgrading domestic consumption’s positive contribution to the official growth figure while also lowering the negative contribution of net exports, or even turning it to positive.

“A good thing here is that the actual trade figures have no impact on the contribution to growth from net exports thanks to Eurostat’s’ high-level mathematical standards set for GDP calculations.”

Simsek: The contribution of net foreign demand to growth was positive at 1.6 points in 1Q24 after five quarters of negative contributions.

“The strength in Turkey’s economy in Q1 – GDP expanded by a whopping 2.4% q/q – was driven by a large boost from net trade while private consumption growth slowed sharply,” Liam Peach of Capital Economics wrote in a note on TUIK’s GDP release.

This signals that the economy is rebalancing and Capital Economics expects this to continue over the coming quarters.

For 2024, Simsek is planning to find the middle ground between the finance industry and the boss, President Recep Tayyip Erdogan, at a little bit below 4% in the official growth release.

As things stand, the middle ground policy will remain in effect.

The statistics, a most flexible tool, allow Simsek to deliver a technical recession (negative official GDP growth figures in two consecutive quarters on a q/q basis) while releasing 4% y/y official annual growth for 2024.

@VeFinans: If Simsek releases 0% q/q official growth figures for Q2-3-4, annual growth will come in at 4.2% y/y.

If he releases 0% q/q for Q2 and -1%s for Q3-4, annual growth will come at 3.4% y/y.

There's no need for -1%s, some -0.X%s will also do the job for a technical recession. As a result, the 3.4% y/y annual figure would move closer to 4% or to “a little bit below 4%” as mentioned above.

Tweet: Thanks to the flexibility of the statistics, Simsek is marketing "net exports’ contribution to the growth" to the finance industry while Vice President Cevdet Yilmaz is using the headline growth rate for his propaganda.

In the coming quarters, Simsek will focus on q-to-q figures while Yilmaz and Erdogan will keep talking about the y-o-y figures.

To talk of “labour’s rising share in GDP”, as mentioned by both Simsek and Yilmaz, is pure comedy.

Some smart dissidents were focusing on labour’s declining share in TUIK’s GDP releases as proof of the misery and wretchedness in the country. With its GDP release for 1Q24, TUIK has solved this problem. The dissidents are now supposed to find another toy to play with.

BloombergHT: Labour’s share in GDP growth reached a record level in Q1 2024.

TUIK has also provided proof that a mid-year minimum wage hike is this year unnecessary, given that labour is already enjoying a record share in GDP.

Turkey’s "orthodox" central bankers are also pushing to avoid a mid-year hike in the minimum wage.

Local daily Sozcu: The central bank governor and his deputies, who are pushing to avoid a mid-year minimum wage hike, have delivered bonuses worth more than two salaries to their staff.

The governor and his deputies do not need bonuses as they already receive chunky salaries and additional benefits along with official vehicles, drivers, secretaries and so forth.

All-in-all, TUIK is really good at its job. It releases a GDP figure and makes everyone happy. Simsek, Yilmaz, the finance industry and labour – they are all simultaneously happy with TUIK’s latest GDP release.

If Simsek transferred the compiling of budget figures to TUIK, the institution would also put an end to the fiscal tightening discussions.

In any case, Simsek’s talk of tightening is doing its job as the finance industry is noting in its analysis that he is applying a fiscal tightening policy.

Simsek is tightening his fiscal policy.

The Erdogan regime’s “structural reforms” are another unending source of fun.

To sum up, Simsek’s "programme" is working as things stand. It had a single goal, namely finding and delivering some FX. And Simsek is currently attracting some notable portfolio inflows.

The poor are crying. They're wailing. The poor always cry and wail and it is the interior ministry’s job to attend to this, it is not the "orthodox" economy personnel’s problem. Whenever a few people come together on the street, they are swept up by the police.

Hope is the poor man’s bread. They can eat it to their heart's content. Inflation will fall and some structural reforms are on the horizon.

Additionally, new main opposition chair Ozgur Ozel, Erdogan’s new boy in “softening the political atmosphere in the country”, is holding a series of meetings. Watch this space. Or don't bother.

The poor are invited to have some more fun on the controlled opposition’s playing field. It is good for socialising. The only problem is that the Republican People’s Party (CHP) chair Ozel has an ugly and loud voice, and he does little but squawk.

Ozel (left) simpering as if he's a new "football transfer", stood before the Justice and Development Party (AKP) flags.

Soon, Erdogan will pay a return visit to the CHP. Ozel can stand Erdogan before the CHP’s flags and the idiot dissidents can keep their mouths shut.

Ozel denies that he had a botox operation on his face while confirming that he had some cosmetic surgery on his eyes (the glasses have gone) and vocal cords (he's still as charming as a crow).

Best not to forget: switching the CHP to a mode where it's a party that "opposes the regime/prevailing order of things" is a pipe dream. The CHP has been the "opposition within the system" since 2002.