Turkey | 1Q GDP already shows the COVID impact

Summary

Turkish Economy grew by 4.5% yoy in 1Q20, lower than expectations (5.5% Our vs. 4.9% Bloomberg). Seasonally and cal. adj. quarterly growth also decelerated to 0.6% from the previous 1.9% in 4Q19. We still maintain our GDP growth forecast at 0% for 2020, assuming a partial gradual recovery pattern in the rest of the year.

Key points

• Key points:
• Domestic demand gave a positive contribution of 8.8pp (5.3pp of which came from inventories), while net exports dragged down 4.3pp from the yearly GDP growth rate.
• Our monthly GDP indicator nowcasts a yearly growth rate of -0.4% for April and -6.3% for May, which would be recovering in June thanks to both positive calendar day effects and the lifting of the restrictions and could even be better than our initial projections.
• Looking ahead, as the lockdown measures begin to ease globally, we expect a gradual recovery from now onwards, whose pattern will depend on the behavioral changes and global risk mood together with the domestic macroeconomic policies.

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