Turkey Economy Expands More Than Expected on Domestic DemandSelcan Hacaoglu and Ali Berat Meric
Turkey’s economy expanded more than expected in the second quarter, boosted by government spending and a pickup in consumption.
Gross domestic product grew 4.4 percent from a year earlier, accelerating from a revised 2.9 percent in the first quarter, the statistics office in Ankara said on its website. The median estimate in a Bloomberg survey of eight economists was 3.5 percent. GDP grew 2.1% from the previous quarter and 4.1% from a year earlier, when adjusted for working days.
Turkey’s $730 billion economy has picked up after posting the slowest growth since the 2009 recession last year. Regional tensions and global economic strains may cap the expansion in the second half. Risks including a plunge in the lira and government bonds, as emerging-market assets declined on expectations the U.S. will start withdrawing monetary stimulus, and the conflict in neighboring Syria.
“Second-quarter growth beat estimates due to higher than expected public investment and consumption figures,” Inanc Sozer, economic research manager at Odeabank AS in Istanbul, said by e-mail after release of data. He forecasts annual growth of 3.6%.
Finance Minister Mehmet Simsek said economic growth may remain under 4 percent for the year due to geopolitical tensions and weaknesses in the world economy. Domestic demand supported Turkey’s growth in the second quarter, he said in an e-mailed statement.
Household consumption grew 5.3 percent from a year earlier, up from 3.1 percent in the first quarter after shrinking in 2012.
The lira weakened 0.4 percent to 2.0334 per dollar at 11:10 a.m. in Istanbul. The currency has dropped 12 percent this year. Yields on benchmark two-year domestic debt fell 1 basis point to 9.43 percent, almost double the record low of 4.79 percent they reached in May.