Gross domestic product in Turkey grew by 1.3% in its second quarter, surprising analysts who expected the increase to be not as strong, according to a Sept. 10 report from Wells Fargo. The better-than-expected outcome is attributed to domestic spending with growth in real personal consumption expenditures increasing to 5.6% from 4.6%, and fixed investment growth spending sharply rising to 9.7% from 0.4%. Turkish exports, however, fell 2.1% and imports rose 1.6%, causing net exports to subtract 1.1% from the country’s overall growth rate.
“Weakness in Turkey’s exports reflects a sluggish economic growth in some of its major trading partners,” states the report. “Turkey is a long way from the supercharged growth rates that the economy racked up prior to the global recession and few analysts see a return to those growth rates anytime soon. Moreover, the country has a host of problems that are reflected in the nosedive in its currency.”
Over the past two years, the lira has fallen by about 40%. As recently as Monday, the lira dropped to a record-low against the U.S. dollar and as of Thursday, its value began rising slightly, according to several media sources. “The lira’s problems are more extensive than simple contagion from other emerging currencies,” explains Wells Fargo, citing the country’s account deficit, inflation and political uncertainty as major factors affecting its economy. “The good news is that GDP growth was stronger than expected in Q2. The bad news is that Turkey still has a long way to go before it is back to ‘normal.’”
- Jennifer Lehman, NACM marketing and communications associate