Boosted by exports, Turkey registers highest growth among OECD countries

With net exports contributing nearly 1 percent, the Turkish economy grew by 5.2 percent in the second quarter, making Turkey the best performing economy among OECD countries

After seeing a 7.3 percent growth in the first quarter of this year, the Turkish economy sustained the trend and registered a 5.2 percent growth in the second quarter. According to the Turkish Statistical Institute (TurkStat) data released yesterday, Turkey's net exports significantly contributed to its growth while net imports of services and goods remained relatively limited. Turkey's growth performance was the highest among the Organization for Economic Cooperation and Development (OECD) member countries and second in Europe, following Malta whose economy expanded some 5.7 percent in the second quarter. When the components of the gross domestic product (GDP) are examined, it is observed that the total added value of the agriculture sector increased by 1.5 percent and the added value of the manufacturing industry saw a 4.3 percent growth.

The institute's data showed that the total added value of the construction sector grew by only 0.8 percent while that of the services sector including the trade, transportation, accommodation and food sectors rose by 8 percent. Moreover, services and goods exports increased by 4.5 percent in the second quarter when compared to the same period of last year while the import of goods and services rose by only 0.3 percent.

"Seasonally and calendar adjusted GDP increased by 0.9 percent compared with the previous quarter," the institute said.

TurkStat stated that GDP by production approach rose by 19.1 percent year-on-year in 2017, and reached approximately TL 3.1 trillion ($850 billion) at current prices.

"In 2017, the manufacturing industry had the largest share [in GDP] with 17.6 percent," it said. "The manufacturing industry was followed by wholesale and retail trade and construction industry with 11.9 percent and 8.6 percent, respectively."

The institute noted that services of households as employers had the lowest share in GDP.

"The GDP per capita in 2017 was TL 38,680 and $10,602 at current prices," TurkStat added.

Commenting on the growth results, Treasury and Finance Minister Berat Albayrak said that the Turkish economy continued to grow thanks to the strong exports and high performance of the tourism sector, which created a net positive contribution to the expansion.

The minister added that strong domestic demand, despite a relative slowdown in consumption and investments, also boosted the growth.

The components of growth, Albayrak said in a statement, shows that the period of economic balancing, which is the primary goal of the economic policies, has started.

"The results of the second quarter also demonstrate that the Turkish economy is expanding in accordance with its export-based growth target," he said.

The minister added that the preliminary indicators show that deceleration in domestic demand will become evident in the third quarter.

"Throughout the rest of the year, it is expected that the net foreign demand will effectively contribute to the growth with continuing strong trend in export and tourism revenues plus falling import demand," he explained. Albayrak also noted a need for a set of macroeconomic stabilization policies for a more determined fight with the fragile points in current account deficit and inflation.

"A fair sharing of the prosperity brought by this growth will be achieved with our qualified human resources and strong society," he added.

Minister Albayrak said that the tight stance in fiscal policy backed by structural reforms, and the macroeconomic stabilization policy will bring economic growth to a healthier path in the medium term.

Meanwhile, Turkey's annual inflation was at 17.90 percent in August, up from 15.85 percent in July.

Over the past five years, the annual inflation saw its lowest level at 6.13 percent in April 2013, while the figure reached its highest level last month.

According to the Central Bank of the Republic of Turkey (CBRT), the country's current account deficit stood at $2.97 billion in June, while the 12-month rolling deficit has reached nearly $57.4 billion.

Turkey's annual current account deficit in 2017 was around $47.5 billion and amounted to some $33 billion in the previous year.

In a written statement, Trade Minister Ruhsar Pekcan said that the net exports made a contribution of 0.96 percent. She said that Turkey aims to reach record-high in exports this year to boost economic growth and employment.

Turkey Exporters Assembly (TİM) Chairman İsmail Gülle pointed to the near 1 percent contribution of net exports to the growth, saying that the share of exports in the quarterly GDP stood at 22.5 percent.

In the light of released data, Gülle said the association thinks that export performance will end the year with success and that it will contribute positively to overall growth.

"At the end of the year, we will reach an export figure of over $170 billion and break another record. Despite the tensions in global trade this year, Turkey's exports of goods continued to grow. Exports of goods and services were up 4.5 percent in the second quarter of this year. We are working for Turkey's faster growth, by focusing more on an export-oriented growth strategy. We continue to build our export strategy on value-added, innovation and research and development to increase our exports and reduce the foreign trade deficit and current account deficit," he said.

Commenting on the contribution of exports to the economic growth, Yatırım Finansman economist Hilmi Yavaş said that net exports compensated for the deceleration in the domestic demand.

Turkey tops OECD countries with GDP growth rate

Turkey topped the OECD member countries and ranked second in Europe with its GDP growth rate in the second quarter of 2018. The Turkish economy grew by 5.2 percent to TL 884 billion in the April-June period compared to the same period last year, TurkStat said Monday.

With these figures, Turkey ranked first among the OECD countries. Turkey was followed by Poland and Chile which grew by 5 percent. The Hungarian economy registered a 4.6 percent growth while the Latvian economy expanded by 4.4 percent.

The OECD countries' average growth rate was 2.5 percent in the second quarter, versus the same quarter of 2017.

On the other hand, the lowest growth rates were seen in Denmark, Japan, and Italy, at 0.6 percent, 1 percent, and 1.2 percent, respectively.

In the first quarter of 2018, Ireland was first among the 36 OECD countries with a growth rate of 10 percent, while Turkey ranked second with 7.3 percent.

Among the 28 countries of the EU, Turkey ranked second after Malta, whose GDP rose by 5.7 percent year-on-year in the second quarter. Poland, Hungary, and Latvia followed Malta and Turkey.

In the same period, the EU's slowest-growing countries were Denmark with 0.6 percent, Italy with 1.2 percent and the U.K. with 1.3 percent.

Both the extra-Euro area 19 (EA19) and the EU economies grew by 2.1 percent in the April-June period, versus the same period last year. Meanwhile, the North American Free Trade Agreement (NAFTA) countries' average growth rate for the second quarter was 2.7 percent.

Turkey's annual GDP growth rate was 7.4 percent in 2017.

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