Turkish Economy Shrinks for 2nd Quarter by 2.6% YoY in Q1

The Turkish economy shrank by 2.6 percent year-on-year in the first quarter of 2019, following a 3 percent contraction in the previous period and compared with market expectations of a 2.5 percent contraction. It was the second straight quarter of GDP decline, as household consumption and gross fixed capital formation continued to decrease while government expenditure advanced faster and net foreign demand contributed positively to growth.

On the expenditure side, household consumption tumbled 4.7 percent, after an 8.9 percent drop in Q4 and fixed investment slumped 13 percent, following a 12.9 percent fall in the previous period. On the other hand, government spending rose 7.2 percent (vs 0.5 percent in Q4) and net external demand contributed positively to the GDP growth, as exports increased 9.5 percent (vs 10.6 percent in Q4) and imports tumbled 28.8 percent (vs -24.4 percent in Q4) due to a weak lira.

On the production side, industrial production shrank by 4.3 percent (vs -6.4 percent in Q4) dragged by manufacturing (-4.7 percent vs -7.4 percent) and agriculture expanded by 2.5 percent, reversing a 0.5 percent fall in the previous period. Meantime, construction output shrank by 10.9 percent, following an 8.7 percent contraction in the third quarter. Also, services output contracted 4 percent (vs -0.3 percent in Q4), mainly due to professional, administrative and support service activities (-13 percent vs -10.2 percent), while financial and insurance activities rebounded (1.5 percent vs -16.2 percent); and public administration, education, human health and social work activities (8.8 percent vs 5.7 percent) and information and communication (2.3 percent vs 2.9 percent) continued to grow. At the same time, real estate expanded by 2 percent in the three months to March, easing from a 4.7 percent rise in the previous period.

On a seasonally adjusted quarterly basis, the economy advanced by 1.3 percent, rebounding from a 2.4 percent contraction in the last quarter of 2018. It was the first expansion in GDP growth since the first quarter of 2017.  

Turkish Economy Shrinks for 2nd Quarter by 2.6% YoY in Q1

Turkish Statistical Institute l Agna Gabriel | agna.gabriel@tradingeconomics.com
5/31/2019 7:58:25 AM