Turkey’s economy grew faster than expected in the first quarter as the government boosted expenditures and households kept on spending. The lira gained after the report.
Gross domestic product expanded 5 percent in the January-through-March period from a year earlier, higher than all estimates in a Bloomberg survey. Seasonally adjusted output rose 1.4 percent from the previous three months, Turkey’s state statistics institute said in a statement on its website Monday.
The government boosted spending on everything from wages to investments to spur the economy after a failed military coup hurt growth last year. The report showed that expansive fiscal policies also boosted household consumption, which makes up about two-thirds of the economy and has traditionally driven Turkey’s growth. The recovery in Europe, Turkey’s largest trade partner, boosted exports and industrial output, according to Ziraat Bank economist Bora Tamer Yilmaz, who had forecast 4.5 percent growth in the quarter.
The broad-based growth “is favorable for the economy’s expansion during the rest of the year,” Yilmaz said by phone from Istanbul after the report. “Government support will gradually decline, and will be replaced by the growing contribution to growth from foreign trade — as long as the European economy continues its recovery. We are planning to revise our 2017 growth forecast higher, from around 4.5 percent now.”
The lira strengthened 0.4 percent to 3.5243 per dollar at 11:35 a.m. in Istanbul.
Public consumption, which makes up roughly a sixth of the economy, rose 9.4 percent from a year ago, Turkstat said. Household spending rose 5.1 percent, compared with 5.7 percent the previous quarter.
Finance Minister Naci Agbal said household consumption will continue to support the economy due to temporary tax breaks. The strong growth data shows the economy’s resilience, Deputy Prime Minister Nurettin Canikli said on Twitter.
“The resilience of the financial structure was tested by shocks,” he said. “The central bank is pursuing independent policies that also take into account economic growth.”
Exports of goods and services rose 10.6 percent in the first three months of the year, the most on an annual basis since the same period in 2014, according to official data. Imports grew 0.8 percent during the first quarter.