Turkish economy expands by 2.5 percent in second quarter

ISTANBUL

The Turkish economy grew by 2.5 percent in the second quarter of 2024, cooling from a revised 5.3 percent expansion recorded in the January-March period, data from the Turkish Statistical Institute (TÜİK) have shown.

“We have left behind a difficult period in which we significantly reduced vulnerabilities,” Finance Minister Mehmet Şimşek commented on the growth data.

Growth began to stabilize, the current account deficit narrowed, the risk premium decreased, foreign resource inflows increased, reserves improved, and Türkiye entered a disinflation period, Şimşek wrote on X.

The contribution of domestic demand to growth decreased to 1.2 points, while the positive contribution of net foreign demand was 1.3 points, the minister added.

The new medium-term program for 2025-2027, which will reinforce the improved environment of confidence and stability, will be unveiled soon, Şimşek said.

“We will continue to resolutely implement policies that will strengthen the foundation of sustainable growth by ensuring permanent price stability,” he added.

The second quarter growth number was weaker than economists’ expectations for a 3 percent growth in the April-June period.

The quarterly gross domestic product (GDP) growth rate also eased from 1.4 percent to 0.1 percent, reflecting the impacts of the tight monetary policies.

The country’s GDP for the April-June period reached 9.95 trillion Turkish liras, or approximately $308.16 billion.

The industry sector’s production shrank 1.8 percent in the second quarter from a year ago after expanding 4.2 percent in the first quarter of 2024.

Output of the key manufacturing sector fell 2.9 percent, comparing unfavorably with the 3.6 percent annual increase recorded in January-March.

The year-on-year expansion of the construction sector slowed from 11 percent to 6.5 percent, while the pace of output growth of the agriculture sector eased from 4.9 percent in the first quarter to 3.7 percent.

The annual increase in final consumption of households plunged from 6.8 percent to 1.6 percent. The share of household consumption in the country’s GDP was 60.1 percent in the second quarter, up from 56.4 percent in the first quarter of this year.

The government’s final consumption expenditure, which accounted for 14.9 percent of national income, grew only 0.7 percent in the April-June period, slowing from 5.4 percent in January-March.

The year-on-year increase in gross fixed capital formation dropped from 9.3 percent to 0.5 percent.

Exports, which grew 4.3 percent in the first quarter, were unchanged in the second quarter from the same period of 2023, while the annual decline in imports accelerated from 3 percent to 5.7 percent.