Turkey’s official 2023 growth on course for “middle ground” as 5.9% y/y posted for 3Q23

Turkey’s official 2023 growth on course for “middle ground” as 5.9% y/y posted for 3Q23
/ bne IntelliNews
By Akin Nazli in Belgrade November 30, 2023

Turkey’s official gross domestic product (GDP) expanded by 5.9% y/y in 3Q23, the Turkish Statistical Institute (TUIK, or TurkStat) said on November 30.

For 2Q23, the TUIK revised its previously reported official growth figure of 3.8% upwards to 3.9%.

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. 

Turkey led the global inflationary period in the post-COVID monetary expansion era. Currently, it is leading the stagflation, or "slumpflation", period.

On August 31, when Turkey released its official GDP data for the second quarter, the country's finance minister Mehmet Simsek wrote in a tweet that the TUIK would release an official growth rate of higher than 4% for 2023.

On September 6, in the government's new medium-term economic programme (OVP), he pencilled in a 2023 growth target of 4.4%.

On August 31, bne IntelliNews noted: “Simsek, who is concentrated on trying to attract some portfolio inflows from global investors, needs to advise foreign players that he has curbed both growth and the trade deficit.”

“He also has a rather burdensome domestic constraint, namely Turkey’s mercurial President Recep Tayyip Erdogan…”

“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 Erdogan would then very likely administer a slap to his shiny pate.

“All-in-all, it seems that Simsek is planning to find middle ground at above 4% growth.”

“In his tweet [on 2Q23 GDP], Simsek also noted that the TUIK released a negative contribution to official GDP growth from net exports.

“The trade deficit has boomed again. Simsek must work a position in which he can close some of the trade gap while pinning hopes on financial inflows from the global crowd.

“So, we can see that when it comes to 3Q and 4Q, 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.”

The Erdogan regime is moving along the path as defined by this publication with its 3Q23 GDP release.

Screenshot: BloombergHT commented that there were some signs of a slowdown in domestic demand.

While posting an increase to 5.9% annual growth in 3Q23 from 3.9% in 2Q23, the TUIK released a sharp slowdown in quarterly growth to 0.3% from 3.3%.

So, everyone is happy. The politician can market the year-on-year growth, while the finance industry can market the quarter-on-quarter figure.

“The sharp slowdown in Turkish GDP growth to 0.3% q/q in Q3, together with more timely figures for Q4, suggest that the economy is rebalancing in response to the policy tightening this year,” Liam Peach of Capital Economics wrote in a note on the latest data release.

If TUIK releases 5% y/y (2.4% q/q) official growth for 4Q23, annual 2023 growth will come in at 4.8%. A 4% y/y (1.4% q/q) release for the fourth quarter will result in 2023 growth of 4.5%, while 3% y/y (0.4% q/q) will deliver 4.2%.

So, it can be concluded that TUIK will release an official growth rate for 4Q23 of around 4% y/y, with the upper boundary drawn at 5% and the lower boundary at 3%.