Turkey’s economy grew 1.4 percent in the fourth quarter last year, the slowest pace since a recession in 2009, as central bank efforts to cut the current-account deficit depressed domestic demand.
The economy grew 2.2 percent in the full year, according to data released by the state statistics institute in Ankara today, trailing other regional economies including Israel, which grew 3.1 percent, and Russia, whose economy expanded by 3.4 percent. That follows expansion in the Turkish economy of 8.8 percent in 2011 and 9.2 percent in 2010.
The slowdown came as central bank Governor Erdem Basci’s rates-corridor policy, which allows him to vary the cost of funding to banks on a daily basis, helped cut the current-account deficit by $28 billion by slowing growth in loans. The gap was still the third-biggest in the world last year at $49 billion, according to a Standard & Poor’s report on March 28. It was the second-biggest after the U.S. in 2011.
“Growth of 2.2 percent is a success” in the context of “a slowing in the global economy, the deepening of the crisis in the EU, our biggest trading partner, increasing geopolitical risks in our region and high petrol prices,” Finance Minister Mehmet Simsek said in an e-mailed statement. “2013 will be a year in which growth accelerates in a balanced fashion.”
The economy will probably expand by 4 percent this year, according to the average estimate in a Bloomberg survey of 31 economists, matching the government’s forecast. Turkey should grow at least 6 percent a year to reach its goal of becoming one of the world’s top 10 economies by 2023, the centennial of the Turkish Republic, Economy Minister Zafer Caglayan said today.
The government is seeking ways to reduce energy imports so that faster growth isn’t accompanied by larger current-account deficits. Turkey runs an external surplus when its energy imports are excluded.
Prime Minister Recep Tayyip Erdogan is backing an initiative to end a three-decade conflict with Kurdish militants in the southeast, a plan that may open the way to energy deals with Kurdish-controlled Northern Iraq. Israeli premier Benjamin Netanyahu’s apology to Erdogan last month for the 2010 killing of Turkish aid activists by Israeli commandos may revive the prospect of a natural-gas pipeline from Israel to Turkey.
“If the relationship between Turkey and Israel recovers, or a peaceful resolution is reached on the Kurdish issue, we expect Turkey to be able to benefit from more diversified and potentially cheaper energy sources,” S&P said.
Gross domestic product climbed to $786.3 billion in 2012 and per-capita income rose to $10,504, according to the statistics office. Private consumption shrank by 0.7 percent in the year, while government spending rose 5.7 percent.
“Private domestic demand was very weak” last year, Inan Demir, chief economist at Finansbank AS in Istanbul, said in e-mailed comments today. “We expect GDP growth to accelerate relying on stronger domestic demand this year.”