Turkey’s economy should expand by 5.5% this year after 6.7% estimated growth in the first quarter, based on the median of a Reuters poll on Wednesday, returning to trend after pandemic lockdowns were careful to avoid key sectors.
Forecasts from 13 economists ranged from 4.5% to 7% for the full-year, while the median estimate was up from 4.5% in a February poll. For the first quarter, forecasts from 14 economists ranged from 5% to 7.5%.
Turkey’s economy grew just 1.8% last year and 0.9% in 2019, well down from an average of about 5% over the last two decades.
It was one of only a few globally to avoid a contraction in 2020 despite the pandemic, thanks largely to a near doubling of lending by state banks to face down the initial virus wave.
While Turkey imposed new coronavirus measures at the end of last year that hit some services, they did not impede manufacturing and other sectors and most were lifted in March.
Economic activity is expected to slow in the second quarter due to tighter financial conditions and a full lockdown imposed in the first half of May.
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But gross domestic product (GDP) is expected to expand on an annual basis due to the sharp contraction last year, when initial coronavirus fallout led to a contraction of 10.3% in the second quarter.
Finance Minister Lutfi Elvan has predicted growth of 5.5% to 6% in the first quarter.
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The Turkish Statistical Institute is expected to announce GDP data for the first quarter at 0700 GMT on May 31.
Commentary
Independent think-tank Betam projects QoQ growth for 1st quarter GDP at 1.4%, which is a better measure of the momentum and is still a fairly robust figure. Private forecasters tend to be more cautious, shooting for a QoQ figure of less than 1%, judging by economic confidence and loan data.
Turkstat’s date is prone to large measurement errors and may overstate the economy’s true strength. In one telling anecdote of how bad economic distress hurt the nation, a report by main opposition party CHP cites 150 suicides related to economic misery in 2019-2021.
If there is any growth, it is certainly not trickling down to the lower-income classes, with Yoneylem May survey indicating over 60% of the respondents complaining about the current conditions in the economy.
With more days spent under lockdowns and credit momentum declining from 11% at the beginning of the year to 5.5% by last count, second quarter is going to be even weaker.
The pace of economic activity in 3Q2021 will be dictated by the tourism season, where expectations are high, but actual reservations for June-July are only a tenth of 2020.
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