Türkiye | GDP grew by 5.9% y/y in 3Q

Turkish economy grew by 5.9% y/y in 3Q, above the market consensus of 5.3% but parallel to our expectation of 6%. We expect GDP growth rate to be 4.5% in 2023 but decelerate to 3.5% in 2024 with a bias to the downside.

Key points

• Key points:
• Private consumption contracted on a quarterly basis for the first time since 4Q20, while investment expenditures gained momentum significantly compared to the previous quarter especially with the support of machinery and equipment, as well as construction.
• The more limited negative contribution from net exports and still strong contribution from domestic demand to the annual GDP growth rate concluded a further depletion from stocks.
• Monetary policy tightening, selective credit policies and restrictions on consumer credit growth started to limit private consumption, while the composition of aggregate demand began to change in favor of investment and exports.
• 4Q leading indicators and our big data proxies suggest that private consumption has started to slow down more significantly, while investment remains strong and the negative contribution from net exports has somewhat come down.
• The recent higher than expected policy rate hike would be supportive to adjust imbalances but the fiscal stance especially before the local election will determine the pace of adjustment in the near future.

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