A street vendor sells toys at an underground passage in Istanbul, Turkey May 31, 2019. REUTERS/Murad Sezer
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- GDP growth of 4% in 2022
ISTANBUL, Aug 24 (Reuters) – Turkey’s economy grew 7.5% annually in the second quarter of the year, a Reuters survey showed on Wednesday, while full-year growth was forecast at 4%, indicating a slowdown in the economy Economic activity in the second quarter suggests mid-year on weaker demand conditions.
The economy grew 7.3% yoy in the first quarter, driven by strong performance, strong exports and resilient domestic demand. The strong performance is expected to continue in the second quarter.
President Tayyip Erdogan’s new economic program has prioritized growth and exports while aiming to fight inflation by supporting Turkey’s chronic current account deficit rather than raising interest rates.
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An easing cycle under Erdogan’s program saw the lira fall 44% against the dollar last year and shed another 27% so far this year, sending inflation to a 24-year high of nearly 80% in July.
While the rate cuts were aimed at stimulating the economy, analysts are forecasting activity could cool off in the second half of the year amid a drop in demand and an expected economic slowdown in Turkey’s biggest trading partners.
The median estimate by 13 economists in a Reuters poll for annual gross domestic product (GDP) growth (TRGDPQ=ECI) for the second quarter was 7.5%, within a range of 5% to 8.7%.
Full-year growth was lower, with the median estimate from 18 economists at 4.05% and forecasts ranging from 3.3% to 5%.
Turkey’s central bank last week cited signs of a slowdown in the third quarter as it shocked markets by cutting its benchmark interest rate (TRIT=ECI) by 100 basis points to 13%.
“It is important that financial conditions remain supportive to maintain the growth momentum in industrial production and the positive trend in employment,” the bank said.
Finance Minister Nureddin Nebati said on Tuesday he expected growth in the second quarter to be higher than the 7.3% recorded in the first quarter.
Turkey’s economy was one of the few to narrowly expand in 2020, largely thanks to cheap credit. In 2021, it rebounded and rose by 11%.
Turkish Statistical Institute is expected to release second quarter growth results on August 31 at 07:00 GMT.
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Additional reporting by Milounee Purohit and Anisha Sircar writing by Ali Kucukgocmen
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