Turkish economic growth accelerated in the first quarter, recouping most of the output lost in last year’s slump as domestic demand drove the fastest annual expansion in almost six years.
Gross domestic product increased an annual 11.7 percent, compared with 6 percent in the previous three months, the statistics office in Ankara said on its website today. The median estimate of 12 economists surveyed by Bloomberg was for growth of 11.5 percent. The economy expanded a seasonally adjusted 0.1 percent from the previous quarter, when it grew a revised 1.7 percent.
The economy is recovering from a 14.5 percent slump a year ago as record-low interest rates revive spending by Turkish consumers and companies. First-quarter growth in the European Union membership candidate was the fastest among the Group of 20 major economies bar China.
“Turkey is a bright star in the region, the only country where we see something of a V-shaped recovery,” Christian Keller, chief economist for European emerging markets at Barclays Capital, told Bloomberg Television in an interview. Barclays expects to see “a rebound and then a moderation,” he said.
The lira was little changed after the announcement, trading at 1.5796 against the dollar at 12:22 p.m. in Istanbul. Yields on benchmark lira bonds were 3 basis points lower at 8.77 percent. The benchmark ISE-100 stock index was up 0.4 percent on yesterday’s close.
‘A While Longer’
Central Bank Governor Durmus Yilmaz has kept the benchmark interest rate unchanged for seven months after slashing it by 10.25 percentage points in the 13 months through November last year. The bank aims to keep it at the present level of 7 percent “for a while longer,” and sees no reason to change its stance because of growing concerns about the pace of Turkey’s recovery and the state of the global economy, according to a statement yesterday. The Monetary Policy Committee next meets on July 15.
Non-government consumption rose 9.9 percent in the first quarter from the year earlier, when it slumped 10.1 percent, the statistics agency said. Automotive production rose an annual 81 percent in the first three months of the year, according to the manufacturers’ association.
Home appliance-maker Arcelik AS and lender Akbank TAS are among Turkish companies that reported a surge in first-quarter profit. The main share index has more than doubled from a low on Nov. 20, 2008, two months after the collapse of Lehman Brothers Holdings Inc.
The index gained 5.2 percent in dollar terms in the first quarter, more than double the increase on the MSCI Emerging Markets Index. Net income at Istanbul-based Arcelik, which makes home appliances, doubled from a year earlier to 109.6 million liras ($70 million) in the first quarter. Akbank, in which Citigroup Inc. holds 20 percent, said profit jumped 56 percent to 967.8 million liras.
Economic recovery is key to Prime Minister Recep Tayyip Erdogan’s bid to win a third term in elections that must be held before July next year. The country survived the global crisis without bailing out any banks and this year Erdogan ended loan talks with the International Monetary Fund, saying it can meet its borrowing needs without external assistance.
The government is preparing to raise its forecast of 3.5 percent expansion for the year, Deputy Prime Minister Ali Babacan told parliament’s planning and budget committee on June 18. The IMF expects growth of 6.3 percent.
Set to Slow
The economy’s expansion is forecast to slow later this year because of the European debt crisis and as unemployment remains above pre-crisis levels. First-quarter growth of about 12 percent will “moderate” in the rest of the year, Finance Minister Mehmet Simsek said on June 3.
Quarter-on-quarter growth slowed for the fourth consecutive three-month period, according to today’s data.
That was a “surprise” that may “give the central bank more room to delay the interest rate normalization,” Inan Demir, chief economist for Finansbank AS in Istanbul, said in a telephone interview.
The unemployment rate declined to 14.4 percent in the first quarter from 16.1 percent a year earlier, the highest since records began in 2005. It’s still above the five-year average rate of 11.1 percent.
‘Loss of Momentum’
“A bounce-back was inevitable but there are already signs of a loss of momentum,” said Cevdet Akcay, chief economist for Yapi & Kredi Bankasi AS, the Istanbul-based lender part-owned by UniCredit SpA. “Turkey’s advantage is that it has a large domestic market. Still, in the end it’s global dynamics that define what happens.”
Confidence among Turkish manufacturers declined in May and June, according to the index compiled by the central bank. July export figures may start to reflect falling demand from countries such as Greece, Portugal and Spain, Mehmet Buyukeksi, head of the Turkish Exporters’ Assembly, said on June 23.