Turkish economy grows 3.8 percent in second quarter

ANKARA

Türkiye’s economy grew by a more-than-expected 3.8 percent in the second quarter of 2023 from a year ago, the data from the Turkish Statistical Institute (TÜİK) have shown.

Treasury and Finance Minister Mehmet Şimşek hailed the latest growth numbers, saying that despite the tight global financial conditions and a contraction in global trade “our economy continued its strong growth performance in the second quarter, when we tried to compensate for the impacts of the earthquake disaster on the economy.”

"We continue to take and implement measures aimed at reestablishing the balance between domestic and foreign demand,” Şimşek said in a statement.

With the policies, which are transparent, consistent and in line with international norms, predictability will increase, he added.

“We started to see the positive effects of the policies we implement on the macro-financial stability. We will continue to take the necessary steps to ensure these effects become permanent,” Şimşek said.

The growth in the quarter was largely driven by household consumption.

On a quarterly basis, the GDP increased by 3.5 percent which compared favorably with the 0.1 percent contraction recorded in the first quarter.

TÜİK revised downward the annual GDP growth in the first quarter from a previous 4 percent to 3.9 percent.

Households’ final consumption, which accounted for 61.7 percent in GDP, increased by 15.6 percent in the second quarter of 2023 from a year ago, slowing from the 17.3 percent year-on-year increase in the first quarter.

Government final consumption expenditures, which grew by 6.1 percent in the January-March period annually, rose by 5.3 percent in the second quarter from a year earlier.

The annual increase in gross fixed capital formation accelerated from 3.7 percent in the first quarter to 5.1 percent in April-June this year.

Economists had forecast a growth rate between 3.3 percent and 3.5 percent for the Turkish economy in the second quarter.

At constant prices, the country’s GDP was $271.5 billion in the January-June period, TÜİK calculated. It was $246 billion in the first quarter.

Türkiye’s export of goods and services dropped 9 percent, which came on top of the 2.6 percent year-on-year contraction in the previous quarter, while imports of goods and services accelerated from 14.2 percent to 20.3 percent.

The annual expansion in the large construction sector quickened from 4.5 percent in the first quarter to 6.2 percent in the April-June period. Real estate activities grew 3.2 percent after rising 2.1 percent in January-March.

The manufacturing sector shrank 1.9 percent in the quarter, after expanding 1.4 percent in January-March, showed the data from TÜİK.

The industry sector’s output fell 2.6 percent compared with the second quarter of 2023, following a 1 percent decrease in the first quarter.

The growth in the services sector slowed from 12.1 percent to 6.4 percent, according to TÜİK.

Last year, the Turkish economy recorded a GDP growth rate of 5.5 percent.

Earlier this month, Treasury and Finance Minister Mehmet Şimşek said that the growth performance remained robust. “Despite all the global financial problems, we forecast a growth rate at around 4.5 percent for the Turkish economy this year,” he said.