Turkish economy expands on industry-based exports, service sector

ANKARA

The industry-related export and services sector has been the main dynamic of Turkish economic growth, economists said Tuesday.

Turkey's gross domestic product (GDP) increased 7.4% in the third quarter compared to the same period last year, according to the Turkish Statistical Institute (TurkStat).

But the figure was below market forecast as a group of 18 economists polled by Anadolu Agency last week projected average year-on-year growth of 8.1% for the quarter.

Although third-quarter growth was slightly below market expectations, it did not reveal a picture that changed year-end growth forecasts, said Erhan Aslanoglu, a professor from Istanbul-based Piri Reis University.

Citing that service and industry items made a significant contribution to growth from a sectoral perspective, he told Anadolu Agency: "We see that services have come into play more strongly, and industrial production also provides significant support."

He also said investments fell after a long time, adding that it is data that should be monitored in terms of increasing export capacity in the coming period.

Throughout the year, double-digit growth of more than 9.5% can be expected, he added.

Uncertainties remain severe

Also commenting on growth figures, Anadolu Agency analyst Haluk Burumcekci said indicators regarding the strength of the growth trend point to a strong increase in the third quarter compared to the previous quarter.

According to GDP data calculated for the expenditure method, private consumption expenditures, public consumption, and net foreign demand increased growth in the third quarter, while investments and the decrease in stocks had a negative impact.

"When we consider the outlook for the upcoming period, the first signals point out that the national income growth remained strong in the last quarter of the year," he said.

Explaining the loosening in monetary policy and foreign demand had an upward effect on growth, he said that a limited increase in credit volume, high inflation, and financial conditions suppressed it.

An increase in banking loan volume and the high price increases may have a downward effect on domestic demand in the last quarter.

"In this direction, we think that this year's growth outlook will not change significantly in the short term remaining until the end of the year and a growth rate of over 10% will be reached,” he said, but uncertainties for the next year will be severe.

After the decline in loan rates in recent weeks, the trend growth in loan volume seems to be supportive for 2022 growth, while the tightening of financial conditions in recent days is followed as a downside risk, he added.

Meanwhile, Turkey was the second-fastest growing economy in the third quarter among member states of the Organization for Economic Cooperation and Development after Chile, the international group said Tuesday.

Chile recorded the highest gross GDP growth rate with 17.3%, while Turkey’s economy grew 7.4%.

*Writing and contributions by Aysu Bicer