Turkey | GDP growth reached 11.7% year-to-date

Summary

Turkish economy grew by 7.4% yoy in 3Q21, resulting in a growth rate of 11.7% in the first three quarters of the year. 2021 GDP growth will likely reach 10.5-11%, beating our current 9.5% forecast. Though, recent currency shock and accompanying tighter financial conditions will likely weigh on the downside for 2022 growth.

Key points

• Key points:
• The quarter-on-quarter growth rate accelerated to 2.7% after growing by 1.5% in 2Q21.
• Domestic demand remained solid on the back of private and government consumption (5.4pp and 1.2pp ) where the investment subtracted from growth (-0.6pp).
• Net exports contribution remained parallel to the 2Q, (exports gained momentum (+5.0pp)while imports recorded a negative growth (-1.8pp contribution).
• In sectoral detail, the main contributor to annual growth was services sector (4.4pp), which was followed by industry (1.8pp) while agriculture (-0.7pp) and construction (-0.4pp) subtracted from growth.
• Given the recent acceleration in credit growth and ongoing strong external demand, economic activity remains solid in 4Q21. However, recent volatility in asset prices and likelihood of mobility restrictions due to new Covid-19 variant (likely to jeopardize external demand) might be the near term downside risks on growth outlook.

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