Turkey's economy is on the way to expansion, and the latest GDP data confirms that the worst is due to the government's stimulus measures and supportive fiscal stance, according to a report by the Uk's leading think-back center, ING Economics.
The report indicated that economic activity in the second quarter of this year contracted by 1.5% year-on-year, better than the agreed estimates of a contraction of 2.0%, although close to the position estimate of -1.6% year-on-year.
Under seasonally adjusted conditions, growth momentum maintained a good pace at 1.2% on a quarterly basis, having moved to a positive zone at 1.6% on a quarterly basis.
The Turkish Statistical Institute (TurkStat) made some minor adjustments to GDP data in the first quarter from -2.6% year-on-year to -2.4% y/y.
Overall consumption continued to play a positive role in growth since the second quarter of 2017, up 3.3% year-on-year, raising the second quarter growth rate by 0.5 percentage points, the report said. This was reflected in the continued expansion of the annual budget deficit to 2.6% of GDP from 2.3% of GDP in the first quarter (1.9% in 2018).
He added that net trade contributed positively to the improvement of the economy, as exports maintained their upward trend, an increase of 8.1% thanks to improved price competitiveness, while imports shrank by 16.9% on the back of weak demand.
The report noted that, despite a slight decline in the construction and industrial sectors, the contribution of all other sectors had improved somewhat compared to the previous quarter, confirming that the recovery process was expanding.