Turkey's economy grows by 3.1 pct in second quarter

Turkey's Gross Domestic Product (GDP) grew by 3.1 percent in the second quarter of 2016 compared to the same period in 2015, according to an announcement by the Turkish Statistical Institute (TurkStat) on Friday.

The figure was slightly short of the median forecast made by the Anadolu Agency Finance Desk, which predicted a 3.3 percent expansion in the second quarter.

GDP increased by 3.1 percent in the second quarter of 2016 compared to the same quarter of the previous year and reached TL 33.06 billion ($11.4 billion) at constant prices, the report said. The report suggests that the economy has maintained its momentum according to constant prices, which excludes the effect of inflation.

At current prices, national GDP saw a more pronounced increase, rising to TL 525.9 million and is up 9 percent compared to the same quarter the previous year.

The report showed that seasonal and calendar-adjusted GDP increased by 0.3 percent compared to the previous quarter.

Also, GDP was downgraded 0.1 points to 4.7 percent during the first quarter from the previously announced 4.8 percent. Following the announcement of the first-quarter growth rate, many economists agreed that the following quarterly growth rates will reach around 3 percent, taking into account possible fluctuations in the overall framework.

Issuing a written statement regarding the growth data on Friday, Deputy Prime Minister Mehmet Şimşek said economic growth maintained a level of 3. 9 percent in the first half of 2016, despite the ongoing geopolitical tensions and weakening global economy.

According to Şimşek's statement, the economy has managed to achieve domestic demand-intensive growth since the last quarter of 2014 due to a low global trade volume and low demand from commercial partners. While domestic demand contributed 5.2 percent to growth in 2016, net foreign demand limited growth with a 2.1 percent negative contribution. Due to weak machinery and equipment investments, private sector investment expenses made a negative contribution in the second half despite the positive contributions of the construction investments.

Şimşek also said that 795,000 people gained employment over the past year, making the number of people who have found jobs following the global crisis 7.2 million.

He added that the general conditions in July weakened compared to the previous year due to Ramadan Bayram and the coup attempt, causing declines in industrial manufacturing and exports. Şimşek stressed that the recession in the economy was not permanent since important developments were observed in export during August.

Suggesting that global developments and domestic factors will limit the pace of growth in 2016, Şimşek said domestic savings and investments should be increased to provide a healthier and higher growth rate.

Şimşek stressed in his written statement that to reach a more powerful and inclusive level of growth, the government will continue implementing structural reforms in the next period with the support of the united atmosphere in society following recent events.

In late August, Şimşek said Turkey's economy is likely to grow 3.5- 4 percent in 2016 and that downward risks related to it have increased. Pointing out that Turkey's borrowing dynamics are positive and there is enough space in the budget to back the economy, Şimşek said the Turkish economy performed well despite negative developments.

Elsewhere, in January, the government announced Turkey's Medium-Term Economic Plan (MEP), covering macroeconomic targets between 2016 and 2018, including growth. The government predicts that year-end GDP will increase by 4.5 percent in 2016, and by 5 percent for 2017 and 2018.