Turkish economy grows 4% in 2015
Domestic demand drives growth
ISTANBUL, March 31, (RTRS): Turkish output grew by a stronger-than-expected 4 percent in 2015, official data showed on Thursday, as robust domestic demand provided cheer for an economy that has been weighed down by political and security concerns.
Spillover effects from the conflict in neighbouring Syria have dented Turkey’s key tourism industry and relations with major trade partner Russia, while investor confidence has been hit by uncertainty generated by an election cycle last year.
Growth exceeded a forecast of 3.9 percent in a Reuters poll, helped by a strong final quarter when the economy expanded 5.7 percent, the Turkish Statistics Institute said. Economists had expected expansion of 5.2 percent in the fourth quarter.
The data provided a welcome reprieve for the long-suffering lira currency, sending it to its highest in four months against the dollar.
“This success was achieved despite last year’s two general elections, increasing geo- political tensions in our region, problems in our trade partners and global financial market volatility,” Deputy Prime Minister Mehmet Simsek said in a statement, adding that the latest data made Turkey the fourth fastest-growing economy among the Group of 20 (G20) countries.
Some economists cautioned that the robust data was further evidence the central bank should be looking to tighten monetary policy. Last week, it cut the upper band of its interest rate “corridor”. President Tayyip Erdogan has repeatedly called for lower rates, even as inflation has recently topped 9.5 percent.
“The strong growth figures, coming alongside mounting signs of an inflation problem, make the central bank’s decision to cut interest rates last week even harder to justify,” said William Jackson, an economist at Capital Economics in London.
The bank said recent indicators showed the economy grew steadily in the first quarter, with private demand expected to rise modestly, according to the minutes of last week’s meeting which were published on Thursday.
In dollar terms, the Turkish economy’s performance last year was nowhere near as robust due to a steep drop in the lira. On a dollar basis, the economy shrank by 10 percent to $720 billion, bringing per capita GDP to below $10,000 for the first time since 2009.
The economic outlook has been clouded by security concerns after a spate a bomb attacks this year, including two in Istanbul — its biggest city and traditional tourist draw — blamed on Islamic State militants.
Tensions with Russia have also hit trade and tourism after Turkey shot down a Russian jet over Syria last year, prompting President Vladimir Putin to impose economic sanctions on Turkey.
The number of foreign visitors coming to Turkey dropped by 10 percent last month, according to data released earlier this week, and marking the biggest drop in a decade.