20171211-法国巴黎银行-Turkey__Growth_peaked_at_double_digits_in_Q3_8页_558kb

Turkey: Q3 GDP Growth Summary

Core Content

Turkey's Q3 GDP growth reached 11.1% year-over-year (y/y), surpassing the Bloomberg market consensus of 8.5% y/y and closely aligning with the forecast of 11.0% y/y. The growth was driven primarily by domestic demand and investment expenditure, with 7 percentage points (pp) attributed to household consumption and 3.6 pp to capital formation. The contribution from net foreign trade dropped to 0.3 pp, down from an average of 2.1 pp in the previous quarters.

Main Points

• Growth Drivers:

  • Domestic demand, particularly household consumption, was a key contributor to the high growth rate.
  • Machinery and equipment investment increased by 15.3% y/y, the highest in two years, showing a recovery from a previous downward trend.
  • Capital formation growth was robust, though construction investment slowed to 12% y/y from 22.5% y/y in Q2.

• Seasonal Adjustments:

  • Seasonally adjusted GDP growth eased to 1.2% quarter-over-quarter (q/q), compared to an average of 3% q/q in the previous three quarters.
  • This indicates that the growth may be partially due to base effects from the previous year's economic contraction following a coup attempt.

• Future Outlook:

  • The report forecasts a slower growth rate in 2018, expected to drop to 4.0% y/y, from 6.5% y/y in 2017.
  • Leading indicators suggest a potential slowdown in economic activity in Q1 2018.
  • The manufacturing, services, retail, and construction sectors' PMI and confidence indicators have started to decline since their peak in August 2017.
  • To maintain growth in 2019, the report suggests the need for additional stimulus measures, such as extending the credit guarantee fund.

Key Information

• Credit Guarantee Fund: Played a significant role in boosting growth, but its impact is expected to wane in the coming quarters.
• Working Days: An increase in the number of working days contributed approximately 1 percentage point (pp) to the annual growth rate.
• Government Expenditure: Dragged on growth, decreasing by 2.1% q/q in Q3.
• Imports: Increased by 3.9% q/q, which had a negative impact on growth.
• 2017-2020 Forecast: The government projected 5.5% annual growth over the period, with the report believing it will be achieved in 2017-2018 but unlikely in 2019 without further stimulus.

Charts Mentioned

• Chart 1: Contribution to growth (source: Turkstat, TEB)
• Chart 2: Capital formation (y/y) (source: Turkstat, TEB)

Disclaimer and Legal Notice

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• Back-tested performance is illustrative only and not indicative of future results.

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