Economic growth in Turkey cools to 2.5 per cent in second quarter

Turkey’s economy expanded by a less-than-expected 2.5 per cent in the second quarter of the year, data showed this week, cooling in the face of a year-long monetary tightening drive.

Second-quarter gross domestic product (GDP) grew 0.1 per cent from the previous quarter on a seasonally and calendar-adjusted basis, Turkish Statistical Institute (TUIK) data showed.

In a Reuters poll, the economy was forecast to have expanded 3.2 per cent in the second quarter, with growth of 3.35 per cent in 2024 as a whole.

There was growth of 6.5 per cent in construction, 3.7 per cent in real estate activities and agriculture, forestry and fishing, 3.4 per cent in information and communication, with the value added increasing by 7.4 per cent in other service activities, TUIK said.

Growth was revised down to 5.3 per cent from 5.7 per cent in the first quarter, when strong domestic demand was pushed up by a minimum wage hike and households bringing purchases forward in expectation of higher inflation ahead.

Last year’s annual growth was revised up to 5.1 per cent from an initial 4.5 per cent, despite a slowdown in main trading partners and a devastating earthquake in February.

Since June of last year, the central bank has hiked its key interest rate to 50 per cent from 8.5 per cent in order to cool inflation that touched 75 per cent in May but dipped to below 62 per cent in July and is expected to continue falling.