Demand, government incentives, reforms cited as reasons for better-than-expected GDP growth
Greater stability in the wake of last April’s constitutional referendum has contributed to economic growth, Deputy Prime Minister Mehmet Simsek said on Monday.
His comments came after the Turkish Statistical Institute reported year-on-year second quarter gross domestic product growth of 5.1 percent, building on 5.1 percent in the first three months of the year.
Turkey's GDP growth up over 5 pct in second quarter
“A significant positive tendency has been observed in the financial market with a decrease in uncertainties after the April 16 referendum," Simsek said.
The referendum saw Turkey narrowly vote to adopt a presidential system of government.
Simsek said domestic demand was the primary driver of growth, contributing 3.2 percentage points as net foreign demand contributed 1.8 points.
Commercial credit provided by the government’s credit guarantee fund supported much of the growth, he added.
“Leading indicators of the third quarter show that Turkey's economic growth continues accelerating,” he said.
The minister said strong economic growth was not enough by itself, although it was positive. “Inclusiveness of growth is our main priority,” he said.
Over the last 15 years, Turkey has experienced an average growth rate of 5.7 percent.
“We will decisively realize our comprehensive reform agenda in the forthcoming period in order to enhance this performance and speed up the structural transformation of our economy,” Simsek said.
Third quarter prediction
He added that Turkey aimed to reach a high-income level through structural reforms as political uncertainties were removed.
Economy Minister Nihat Zeybekci said that, according to current indicators and analysis, third quarter growth would break the 7 percent barrier.
“As the government, we focused on production, investment and exports after April with the strengthening of political stability,” he said in a statement.
Turkey performed better than EU countries, which showed an average 2.4 percent economic growth, he said. Eurozone economies had shown 2.3 percent growth while Organization for Economic Cooperation and Development (OECD) states showed 2.4 percent.
The new growth figures run contrary to forecasts by international institutions such as the International Monetary Fund, the World Bank and the OECD, which predicted growth of between 2.5 percent and 3.5 percent.
Government support and incentives were reflected in the second-quarter growth rate, Finance Minister Naci Agbal said, while rapid economic reform, strong confidence and positive international developments would continue to support the recovery.
Development Minister Lutfi Elvan said improving domestic and global conditions would allow Turkey to realize its potential.
“Within this scope, we will continue to astonish international institutions with our third quarter growth rate, which will exceed the first and second quarters’ rates,” he said.
“Technological and methodological innovations are rapidly transforming economic processes on a global scale. Turkey will not fall behind this change and transformation.”