Turkey | First Positive Growth since 3Q2018

Summary

Turkish Economy grew by 0.9% yoy in 3Q19 (Consensus; 1%), the first positive YoY growth since 3Q18. The GDP grew by 0.4% in quarterly terms, signaling some momentum loss comparing 1.2% qoq in 2Q19. We maintain a prudent GDP growth forecast of 0.3% for 2019 with some upside risk and a neutral 3% for 2020.

Key points

• Key points:
• Domestic demand continued to recover in 3Q19 while net exports gave a negative contribution.
• We expect an acceleration of the recovery in the next two quarters on the supportive financial conditions and substantial base effects.
• On the sectorial side, industry and services sectors displayed positive growth in annual terms after contracting in the last three quarters while construction sector continued to shrink in 3Q but showing some improvement at least.
• Uncertainties stemmed from geopolitics, global and still incomplete corporate restructuring put some risks in the medium term.
• Complacency should be ruled out and policy mix should be prudent.

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