Lo and behold, Turkey grew by 5%!
In recent times, we have become accustomed to the fact that growth rates have consistently reached beyond our expectations, especially since the calculation method was altered. As a matter of fact, this is the case we’ve been facing in the first quarter of 2017. The general expectation among analysts had been for 3.8% growth ahead of the data. But the actualization was a whopping five.
When forecasting growth, the most considered parameters are ‘not adjusted’ figures and the manufacturing industry growth rate. It was expected that this figure and the manufacturing industry increase rate used in GDP calculations would be close. The man- ufacturing industry production increase rate was 1.5% in the first quarter, but the manufacturing industry increase rate used in GDP calculations, which is based on economic territories, was 5.1% for the same period. The gap can’t be explained only by a difference in the methodology of calculations – and this has been going on for three years. According to the new series manufacturing industry index, the average monthly increase rate since the first quarter of 2013 has been 3.0%. Despite this figure, the average manufacturing industry share of GDP amounts to 6.1%.
Similarly, the service sector – another big economic territory – has also achieved a respectable high growth rate of 5.2%. Howev- er, the ‘retail sales volume index’ calculated by TurkStat declined by 2.3% year-on-year. It’s odd that the service sector showed such an increase while sales volume declined. Whereas the retail trade sector confidence index declined by 11.3% over the same period, the increase in the service sector confidence index was only 0.7%. With the new series we can’t now see the allocation of investment expenditure (gross fixed capital formation) between the public sector, price sector, construction, machine and equipment, and other assets. Total investment expenditure rose by only 2.2%. But machine and equipment investment over the same period declined by a high rate: 10.1%. (On the other hand, building licenses in terms of square measurements, for instance, declined by 17.2%.)
Another odd discrepancy among economic indicators lies between growth and unemployment. In an economy growing by 5%, unemployment would be expected to decline or at least level out. Yet, despite overall growth of 5%, 12.1% unemployment recorded for the fourth quarter of 2016 rose to 12.6% in the first quarter of 2017. If we accept the accuracy of the figures, they indicate a significant increase in labor productivity (GDP per worker) for the last two quarters. However, another explanation may be the increase in refugee employment not reflected by official statistics.