Türkiye’s economy experienced slower growth than anticipated in the second quarter, with an annual expansion of 2.5 percent amid a prolonged monetary tightening strategy, according to data recently released. However, the quarterly growth rate surprised analysts by remaining in positive territory.
The gross domestic product (GDP) for the second quarter rose by 0.1 percent compared to the previous quarter on a seasonally and calendar-adjusted basis, as reported by the Turkish Statistical Institute (TUIK), avoiding the expected contraction.
In a Reuters survey, the economy was projected to grow by 3.2 percent annually, with a forecast of 3.35 percent growth for the entirety of 2024.
Since June 2023, the central bank has raised its key interest rate from 8.5 percent to 50 percent to temper demand and combat inflation, which peaked at 75 percent in May but decreased to below 62 percent in July, with expectations for further declines.
Finance Minister Mehmet Simsek suggested that leading indicators point to stabilizing growth in the third quarter, with expectations of “a balanced growth composition” for the year. He mentioned on X that growth has started to stabilize, the current account deficit has narrowed, the risk premium has decreased, forex inflows have accelerated, reserves have improved, and a disinflation process has begun.
Sectoral growth highlights
According to TUIK, sectors such as construction (6.5 percent), real estate activities and agriculture, forestry, and fishing (3.7 percent), as well as information and communication (3.4 percent), have shown positive growth, with other service activities increasing by 7.4 percent.
Additionally, growth for the first quarter was revised down from 5.7 percent to 5.3 percent, influenced by strong domestic demand driven by a minimum wage increase and households making purchases in anticipation of rising inflation.
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