A money changer counts Turkish lira bills at a currency exchange office in Istanbul January 24, 2014. (Reuters)
Ankara – Turkey’s economy achieved a growth rate of 5 percent in the first quarter of 2017 compared to figures in the same period last year, according to data from the Turkish Statistical Institute (TÜİK).
This surging growth surprised markets, which expected a maximum growth of 3.8 percent. It also indicated that the Turkish economy has begun to recover after a sharp recession driven by the failed coup attempt in mid-July 2016.
The Turkish annual gross domestic product (GDP) growth rate increased by 2.9 percent in 2016, and 3.5 percent in the fourth quarter.
Figures showed that the strong growth in 2017 Q1 is driven by a hike of exports, which increased by 10.6 percent. Experts suggested that the weakness of Turkish lira enhanced the competitiveness of the exported commodities.
The Turkish lira lost around 25 percent of its value against the US dollar in 2016, but it has begun to recover again in the few past weeks.
Özgür Altuğ, chief economist at BGC Partners, said he had revised his 2017 GDP growth forecast from 2.5 to 4.7 percent, versus a government forecast of 4.4 percent.
In this context, many economy experts are dealing cautiously with the official Turkish figures, after the government changed its method used to calculate the GDP last month. Altuğ said this change and the divergence of the monthly and quarterly figures still complicate the forecasts.
The Organization for Economic Cooperation and Development (OECD) raised its 2017 growth estimate for Turkey from 3.3 percent to 3.4 percent. In its forecasts for June, the OECD said the economy in Turkey saw a recession in 2016 because of the failed coup attempt in July and the growing political tension in the region. However, the new reforms adopted by the Turkish government in order to boost the economy revived investments again.
This step came after the World Bank predicted that the Turkish economy would expand 3.5 percent in 2017, up from 3 percent. The Paris-based OECD expected the growth rate in turkey to reach 3.5 percent in 2017-2018 in view of the constant political tensions. However, the implementation of the economic reforms may enhance the trust in the Turkish economy and boost the growth.
The organizations’ report predicted that unemployment rate will increase from 10.7 percent to 10.8 percent in 2017; the inflation rate will increase to 10.4 percent and then drop to 8.1 percent in 2018, the report continued.
Many global financial entities have raised their 2017 forecasts of the Turkish economy following on the indication it showed during the first half of the year.
The British HSBC bank amended its 2017 forecasts for the Turkish economy. In its report covering the first half, the bank said the economic indications point out to a possible 3 percent growth by the end of 2017.
HSBC noted that amendments came after the improvement of the economic performance in the country especially during the second quarter of 2017, after it expected 2.3 percent growth in its first report in 2017.