Turkey GDP Growth Moderates In Q2

(RTTNews) - Turkey's economic growth moderated in the second quarter on weak domestic demand, official data revealed Monday.

Gross domestic product posted an annual growth of 2.5 percent after rising 5.3 percent in the first quarter, the Turkish Statistical Institute said. The rate was slower than economists' forecast of 3.2 percent.

Quarter-on-quarter, the economy grew only 0.1 percent. A similar slower growth was last reported in the first quarter of 2023. This follows first quarter's downwardly revised 1.4 percent expansion.

On the expenditure-side, household consumption gained 1.6 percent and government spending grew 0.7 percent. At the same time, the increase in gross fixed capital formation was 0.5 percent.

Exports of goods and services moved up 0.04 percent, while imports of goods and services declined 5.7 percent.

Capital Economics' economist William Jackson said the breakdown of the data added to the evidence that rebalancing remains bumpy.

Data argue in favour of the central bank keeping interest rates high for longer, the economist added. The firm expects the first rate cut in the first quarter of next year.

At the August meeting, the Central Bank of the Republic of Turkey had left its key interest rates unchanged for fifth straight session, at 50.00 percent.

Tightening financial conditions, slowing real wage growth and a likely increase in the unemployment rate point to a further slowdown in economic activity in the period ahead, said ING economist Muhammet Mercan.

Purchasing Managers' survey data today showed that the Turkish manufacturing sector continued to contract midway through the third quarter. The headline PMI rose to 47.8 in August from 47.2 in July, S&P Global reported.

New orders moderated for the fourteenth consecutive month in August. As a result, firms scaled back their output, employment and purchasing activity. However, input costs increased sharply and manufacturers raised their output prices at a faster pace, the survey showed.