The economy grew at the rate of 4 percent in the third quarter of 2015, up from 3.8 percent in the second quarter, the Turkish Statistical Institute (TurkStat) reported on Thursday. The figure exceeded the 2.7 percent growth expected by most analysts. The main reasons behind this more than expected growth rate were rising household expenditures, public spending and increasing agricultural production, according to economists. Turkey ranked as the fifth-fastest growing country of the world in the third quarter.
The economy experienced a 2.3 percent gross domestic product (GDP) growth in the first quarter and a 3.8 percent GDP growth in the second quarter. After the 4 percent growth was announced on Thursday, the year-end expectations, which were around 3 percent, started to change. Finance Minister Naci Ağbal said that Turkey will grow more than 3 percent in 2015, since the average for the first three quarters was already 3.4 percent.
Ağbal noted that the Nov.1 elections allowed the Justice and Development Party (AK Party) to form a single-party government and instill confidence in both consumers and the private sector. As a result, economic activities in the last quarter gained speed and pushed the growth above 3 percent. The government had announced in October that Turkey will grow by 3 percent in 2015, revising it from the 4 percent estimate given in the mid-term economic program released in December 2014. The revised mid-term economic program stated that growth would be 4 percent in 2016 and 4.5 percent in 2017. The new version also includes estimated growth for 2018, which is 5 percent according to the government.
Turkey owes its 4 percent success to the private sector demand, according to the country's deputy prime minister. The Deputy prime minister, who is responsible for overseeing the economy, Mehmet Şimşek, said on Thursday that the growth has been achieved due to high private sector demand and that 2016 growth figures will be even higher, since political stability has been achieved and therefore the structural reforms needed for the economy will be realized.
Household consumption expenditures increased by 10.6 percent in the third quarter, TurkStat noted. Speaking to Daily Sabah, economist Kerem Alkin said that since people didn't believe that they would lose their wealth or that their income would decline, despite the political instability, terrorist attacks and global economic crisis, they maintained their level of spending. As the figures show, people spent even more under these circumstances.
In the third quarter, generous public spending also supported growth. Public spending increased by 7.8 percent to reach $3.6 billion during the same time period. Increasing agriculture activity contributed the most to the GDP increase; the sector increased by 20.1 percent from the same quarter in 2014, the report said. The value added by the industry increased by 7.5 percent in the quarter, the research said. The service sector's contribution to GDP rose by 11.2 percent.
