Turkey's GDP growth rate hits 2.9 percent in 2014

Turkey's gross domestic product (GDP) expanded by 2.6 percent in the final quarter of 2014, resulting in 2.9 percent full-year growth, the Turkish Statistical Institute (TurkStat) said in a statement released yesterday. Turkish economy succeeded in growing continuously for 21 quarters, and the announced growth rate for 2014 was above market expectations, which was around 2.7 percent average.

The per capita GDP was realized at TL 22,753 ($8,721) at current prices in 2014.

GDP increased by 2.9 percent in 2014 and reached TL 126 billion at constant prices. At current prices, however, it increased by 11.6 percent and reached TL 1.750 trillion. In contrast, Turkey's growth rate was 4.1 percent in 2013 and 2.2 percent in 2012.

Final household consumption expenditures increased by 1.3 percent, final government consumption expenditures increased by 4.6 percent and exports of goods and services increased by 6.8 percent, whereas imports of goods and services decreased by 0.2 percent.

Deputy Prime Minister in charge of economy, Ali Babacan, released a press statement yesterday that indicated the 2014 growth was limited by global market volatility, geopolitical developments and bad weather. Babacan emphasized that structural reforms, which was announced by the government as Primary Transformation Programs, will increase Turkey's growth potential and reduce its economic vulnerabilities.

Bad weather in 2014 limited growth and narrowed production, which decreased by 1.9 percent; however, the industry and service sectors supported the economy by increasing 3.5 percent and 4 percent, respectively.

Economists are discussing a new economic model for Turkey to push growth. Speaking to Daily Sabah, economist Cemil Ertem said that Turkey needs pro-growth reforms. Moreover, he said the government's primary transformation programs should be implemented immediately.

Finance Minister Mehmet Şimşek stressed that the government estimates that growth will speed up with increasing political and financial predictability. The government was targeting a 3.3 percent growth rate, which was announced with the medium-term economic program in October. Highlighting the the realized growth rate, Şimşek said that 2.9 percent is below targets as a result of weak progress by global economies. He further emphasized in his written statement that Turkey showed good performance despite the ongoing stagnation in the EU, the biggest trade partner of Turkey, geopolitical conflicts and financial uncertainties.

The government does not expect a better rate for the first half of 2015, but it maintains high hopes for the second half of the year. The domestic market had contributed zero percent to the growth rate according to Economy Minister Nihat Zeybekci. Last week, he said the growth will not satisfy expectations, and that the figures for the first quarter of 2015 will not be as expected either. Şimşek also said that consumption and investments were postponed in the beginning of 2015 because of financial fluctuations; however, he added that growth will speed up with a more stable environment.

The lira has lost 20 percent of its value against the dollar over the past year. The dollar-lira parity was 2.6170 late Tuesday afternoon.