Turkish economy up 4 pct in third quarter, surprising analysts

ANKARA

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Turkey’s economy grew at a surprising 4 percent in the third quarter from the same period in the previous year, the Turkish Statistics Institute (TÜİK) reported on Dec. 10, beating expectations and showing the economy in better shape than many analysts had forecasted.

The figure exceeded analyst consensus estimates at 2.7 percent. Adjusted for seasonal and calendar factors, gross domestic product (GDP) grew 5.4 percent in the third quarter from the same period of 2014 and 1.3 percent from the second quarter of 2015, it added.

Özgur Altuğ, chief economist at BGC Partners in Istanbul, said the rise came despite political uncertainty surrounding the Nov. 1 election and increased attacks by the outlawed Kurdistan Workers’ Party (PKK).

“The data confirmed that the economy continued to accelerate in the third quarter despite political uncertainty and rising terrorism,” he said.

Coupled with better-than-expected October industrial output figures, Altuğ said he would revise the 2015 GDP growth forecast from 2.7 percent to 3.4 percent.

“The figures confirm the Turkish economy’s resilience to shocks,” he said. 

“Solid domestic demand continues to fuel growth in Turkey,” Christopher Dembik, an economist with Saxo Bank, told Anadolu Agency.

“Consumers had held back spending when the Turkish Lira lost value earlier this year. Now that it has stabilized, confidence in spending has returned,” Dembik added.

Household final consumption expenditure increased by 10.6 in the quarter at current prices, the report said.
The Consumer Confidence Index increased to 77.15 in November from 62.78 in October. 

Growth was up from 3.8 percent in the second quarter. The nine-month GDP growth rate increased by 3.4 percent in the third quarter of 2015, the report said.

Increasing agriculture activity contributed the most to the GDP increase. The sector increased by 20.1 percent at current prices from the same quarter in 2014, the report said.

The value added by industry increased by 7.5 percent in the quarter, the research said. The services sector’s contribution rose 11.2 percent in value.

Industrial production rose 4.6 percent in October from October 2014 in Turkey, according to a separate report from TÜİK.

“Increases in German manufacturing have meant that Turkish producers can benefit, as Germany is Turkey’s largest market for the export of intermediate goods,” commented Bora Tamar Yılmaz, an economist with Ziraat Securities in Istanbul, in a note.

Dembik pointed out that exports were expected to increase in the coming year as the EU - Turkey’s largest export market - sees economic growth thanks to the stimulus program of the European Central Bank.
Exports may replace domestic demand as the principal driver of growth in Turkey in the coming year, he added.

The headline growth figure was “staggering,” said William Jackson at London-based Capital Economics in a note to clients, adding it was the fastest annual growth rate since the second quarter of 2011. He said the figure meant that full year GDP growth for 2015 would likely be to “stronger than we had previously anticipated,” predicting a figure closer to 3.5 percent than 3.0.