The real sector confidence index data, the capacity utilization rate and the manufacturing production data for April have revealed that Turkey's gross domestic product (GDP) growth in the second quarter of 2021 will point to one of the highest rates of increase in the country's modern history.
I can already state that I expect this rate to be between 28% and 30%.
Of course, these rates are mathematical corrections for the recession from the global coronavirus pandemic in the second quarter of the last year.
However, considering that production and exports are still struggling to recover in the leading developed and developing countries, Turkey's performance is being closely followed by international economic circles.
In this regard, while the U.S.-based international financial institution J.P. Morgan raised its expectation for Turkey's 2021 growth performance from 6.1% to 6.8%, the international rating agency S&P revised its 2021 growth forecast from 3.6% to 6.1%.
For international economic and financial institutions, such strong growth in the midst of a global pandemic also means better-than-expected tax revenues for the public fiscal balance.
As a matter of fact, the central government budget performance for the January-May period shared by Treasury and Finance Minister Lütfi Elvan highlights that continued strong performance is needed to meet the budget targets.
In addition to this, despite all the global economic damage caused by the pandemic, the Turkish export volume is on track to meet the $200 billion (TL 1.74 trillion) target for 2021. Even if there was no pandemic, it would have been hard to push the $200 billion target in 2020.
This fact shows how high Turkey's export flexibility is and also confirms that the country has once again proved during the pandemic process that it is a safe haven supplier country.
For this reason, countries that have experienced supply problems during the pandemic (especially China and other Asian countries) have directed their orders to Turkey.
This also means that the Turkish real sector should continue its investment expenditures.
As a matter of fact, in the latest published real sector confidence index data, investment expenditures and production volume trends and expectations are extremely positive and strong.
Moreover, the highly positive export and employment expectations of Turkey, which has utilized all kinds of opportunities to eliminate all of the pandemic's negative effects, show that it will continue to surprise international economic circles that share their forecasts for the Turkish economy in 2021.
The retail sector (since last September) and the services sector (since April) have accelerated their recovery, while the increase in vaccination rates and the reduction of restrictions will further reinforce the recovery in the sectors.
When we take into account the recovery in the manufacturing industry capacity utilization rate and the consumer confidence index, it is highly likely that the second-quarter growth rate data of the Turkish economy will be very surprising.
This situation will push all international economic and financial institutions to revise their growth expectations for the Turkish economy upwards for 2021.
As a matter of fact, both the announced data and the vaccination process, which broke records, caused some international financial institutions to revise their 2021 growth forecasts for Turkey.
However, I will not share these revisions. Because, after all, the second-quarter growth data will surprise all spectators and it is highly probable that there will be another revision to these forecasts.
Therefore, although I will share my spot-on forecast for second-quarter growth at the beginning of August, I would say that we should already prepare ourselves for a growth rate between 28% and 30%.
Delta variant wave
The most important reason why the dollar index, which was 89.83 points on May 31, surpassed 92 points on June 18, and therefore, the euro-dollar parity fell from a point close to $1.22 to $1.19, is that the "appetite for risk" in global markets has been disrupted.
The reason for the loss of this appetite for risk is that we moved from optimistic expectations that feed the risk appetite in the markets to pessimistic expectations that caused the U.S. dollar to strengthen again in just a few weeks.
The most critical topic that is rendering the expectations more pessimistic is the ongoing uncertainty about the course of the pandemic.
The concern is that the pandemic will pick up speed again in the fall because of countries where vaccination is slower than expected due to either population size or economic reasons.
In particular, the delta variant stands out as an important topic due to its spreading power and the risks it causes in these countries.
Therefore, there is a strong perception of uncertainty as to whether the delta variant will cause a fourth or fifth surge in the fall.
Global markets want to see how fast vaccination campaigns will progress around the world and, accordingly, how that is reflected in the number of cases in the autumn.
For this reason, the statements to be made by international institutions, especially the World Health Organization (WHO), will continue to have a big influence on market trends in the coming days.