Moderate growth continues, revival delayed

Apparently, moderate growth in the Turkish economy continues. Third quarter data will be consolidated with the announcement of growth data on Dec. 10.

When growth indicators are reviewed, it is now being estimated that the annual growth rate, which was 2.9 percent in the second quarter, will not undergo a major change and will be around 2.5 percent in the third quarter.

According to the last bank analysis reports, data revealed indicate that foreign demand, which has contributed 5.7 points to growth in the second quarter, has fallen down to almost 4 points in the third quarter. On the other hand, domestic demand, especially investments, is thought to have continued to shrink.

Expectations for the last quarter of the year, similarly, indicate that moderate growth will continue and that a significant improvement in the economy is not predicted.

As yearend nears, as the Central Bank frequently states, it appears that whether or not a boost in the economy occurs will be carefully observed.

There is yet no data that would facilitate a healthy estimate for the last quarter of the year. Nevertheless, market experts, by reviewing credits, advance export data and revealed survey results, say that there is no significant revival in the economy foreseen in the last quarter of the year.

According to capacity use November statistics announced by the Central Bank the other day, the capacity usage rate has decreased 2.9 points to become 74 percent compared to the same month last year. The fact that there was a drop of 0.9 percent in November compared to the previous month is data that strengthens the assertion that moderate growth will continue in the last quarter.

Capacity usage rate freed from season and calendar effects has also dropped 0.4 points to become 72.7 percent compared to the previous month, whereas in October, capacity utilization had increased 0.3 points.

Central Bank decisions
According to the Central Bank’s last real sector confidence index, the fact that there was a drop of 1.4 percent in November also comes out as data that strengthens the same picture.

From the point of view of the markets, these data on growth rates, these analyses and estimates are significant in order to guess what decision the Central Bank will make next term.

In the case that this course continues, the estimates of market actors are leaning toward a revival only in the second quarter of 2013.

However, the markets were expecting the recovery to start earlier in line with what the Central Bank’s last decisions and messages conveyed. Because of this reason, it is estimated that the Central Bank may accelerate its decisions supporting growth under the name of “financial stability.”

In other words, in the near future, markets may nurture expectations that the 14-15 percent increase rates announced earlier to increase credit volumes would be allowed to go higher, and for this, interest rate cuts may accelerate.