Turkish Economic Growth May Accelerate Further in Q2 Of 2013

Recent data updates for Turkey point to an increase in the economic activity in the quarters ahead. While low inflation and interest rates are likely to boost consumption, rise in business confidence points to a recovery in production.

In Q1 of 2013, the GDP grew 3 percent yoy, up from the 1.4 percent registered in the previous quarter. Services and construction were the main drivers of the expansion while mining and quarrying contracted. The economy grew 1.6 percent qoq up from 0.1 percent recorded in the previous three months.
In May, consumer confidence rose to 77.46, the highest level since May of 2012. Although in Q1 of 2013 retail sales growth eased to 7.4 percent yoy from 8.5 percent in Q4 of 2012, the improvement in consumer sentiment points to a rebound in consumption in the quarters ahead.
In April, industrial production expanded more than expected. And, although, in June, business confidence decreased slightly to 111.8 points, it stood well above the 108 points recorded in the same month of the previous year.
Although in May, the annual inflation rate rose slightly to 6.5 percent, it is still well below the 8.3 percent registered in the same month a year earlier. Low inflationary pressure has allowed the Central Bank to slash borrowing costs three times in the last seven months.
In April, exports decreased 0.9 percent yoy to $12520 million, while imports rose 18.4 percent yoy to $22824 million.
In the last few years, current account deficit worsened due to rise in imports, slow exports growth and a decline in foreign direct investments. In April, the current account deficit widened 51.4 percent mom and 74.5 percent yoy.

Duarte Ricardo | duarte.ricardo@tradingeconomics.com
6/25/2013 1:07:15 PM