- GDP expanded 3.5% annually last quarter, above 2.9% estimate
- Push for growth came at the expense of price stability
According to Bloomberg article published on February 28, 2023, Türkiye’s economy grew faster than expected last quarter as the government ramped up spending ahead of elections, though two devastating earthquakes this month have clouded the outlook.
Gross domestic product rose 3.5% in the October-December period from a year earlier, above the median estimate in a Bloomberg survey of analysts. Growth for the whole year was 5.6%, state statistics agency TurkStat data showed on Tuesday.
Consumption, alongside government expenditure, were the biggest contributors to a spurt in activity.
Household spending, which is estimated to account for more than half the economy, grew an annual 16.1% during the final quarter of the year, though there was some loss of momentum from the previous three-month period. Government spending rose 9%, the fastest pace of growth since presidential elections in 2018.
What Bloomberg Economics Says...
“Our annual growth rate forecast is at 2.9% for 2023, up from our earlier estimate of 2.6% following the surprise to the upside in 4Q22. That is still markedly lower than the economy’s long-term average of 4.6%. An expedited rebuilding activity in disaster areas in the lead up to the vote could pull up some of the output to the first half of the year, and presents an upside risk to the outlook.” Selva Bahar Baziki, economist.
Domestic and external demand for Turkish goods appeared to be strong in the first month of the year but the impact from Feb. 6 earthquakes on manufacturing is too difficult to quantify at the moment, said Haluk Burumcekci, an Istanbul-based economist.
“Accordingly, risks to our 2023 growth estimates of 3% are on the downside,” he said in an emailed report after the GDP data.
The figures are politically sensitive in Türkiye as President Recep Tayyip Erdogan prioritized economic growth ahead of general elections expected in May. Following the disaster, he’s stepping up post-quake rebuilding efforts to shore up his party’s popularity.
The World Bank on Monday estimated the earthquakes will inflict a direct cost to Türkiye’s economy of as much as $34.2 billion, or about 4% of 2021 GDP, according to a preliminary assessment. The lender also said it would lower its 2023 growth forecast by about half a percentage point from its initial 3.5%-4% estimate.
