Türkiye | Turkish economy grew by 5.7% y/y and 2.4 q/q in 1Q24

Summary

Turkish economy grew by 5.7% y/y in 1Q above the market consensus of 5.5% but lower than our expectation of 6%. Given the strong performance of 1H24 and lagged effects of expected fiscal consolidation and monetary policy, risks start to be tilted to the upside for our 2024 GDP forecast of 3.5%.

Key points

• Key points:
• Private consumption continued to lose pace on quarterly terms, while investment showed gains compared to the previous quarter supported by the construction and machinery and equipment.
• The net exports posted positive contribution to annual growth (1.6pp) for the first time in 6 quarters, as a result of continuing quarterly contraction in imports and supportive exports growth.
• Albeit the rebalancing of the composition of growth, the adjustment seems to be gradual since the aggregate demand remained stronger than supply maintaining the negative contribution of stocks.
• Our monthly GDP Indicator nowcasts an annual growth rate of around 4%, including negative calendar day effects since our nowcasting on quarterly GDP points a slight slow-down closer to 1.4% q/q as of May (vs. 2.4% in 1Q24).
• Considering the current solid momentum and the lagged effects of expected fiscal consolidation and monetary policy, the risks start to be tilted to the upside for our 2024 GDP forecast of 3.5% and to the downside for our 2025 GDP forecast of 3.5%.

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