GDP Growth – TUR

Growth Rates are revealed for Turkish economy (2019 Q2)

As the underlying reasons of recession fears previously discussed under inverted yield curve, I will not dwell on the situation here once again, but rather on an evidence check. This month we will all be looking for the economic data and announcements of leading central banks on the outlook of global demand and supply conditions. And of course with that, their decisions on interest rates, quantitative easing etc. 

And the first issue that took my attention today was the release of gross domestic production (GDP) figures in the second quarter of 2019, for Turkey, by the Turkish Statistical Institute. There is much to comment on figures or future expectations, but the clear and simple result is that: Although the Turkish economy is in slumpflation phase, it looks like on a path of recovery. Expenditure based GDP shrank by 1,5 percent year-on-year, while adjusted GDP rose by 1,2 percent compared to last quarter.

At the above graph, I have plotted the percentage change in GDP values, which are calculated with expenditure method, in comparison to the same quarter of the previous year. It is seen from turquoise columns, that the GDP growth rates are falling since the peak of 2017/q3 and even this fall has touched to negative zone in 2018/q4. But than the economy finally managed to start a recovery. With the current state of high inflation and declining growth, it is apt to define the status of the Turkish economy as a “slumplfation”. The figures, that today released, show that the Turkish economy contracted by 1,5 percent, year-on-year in the second quarter of 2019. This is better as the previous two quarters, but still in minus.     

On the other hand, I have also plotted the “seasonally and calendar adjusted” data for the same period with a blue line. Being smoother with the adjustments, GDP growth rate also follows the same pattern, but only in a narrower band. Today’s data shows that the Turkish economy expanded in the second quarter of 2019 by 1,2 percent with respect to previous quarter. As the one period earlier data indicates 1,6 percent growth, this result can also be interpreted as continuation of the current, declining macro trend. But I am optimistic on the issue and thinking that, unless a contagious effects from the crisis in Argentina widens or a global recession occurs, the Turkish economy will slowly recover.       

Ergun UNUTMAZ, 02.09.2019