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TURKEY'S ECONOMIC GROWTH PROSPECTS STRUCK
Turkey's gross domestic product, or GDP, contracted 3.3 percent on an annual basis in the third quarter this year. Downward revisions by the Turkish Statistics Institute, or TurkSat, for the first and second quarters, however, have put overall growth targets for the year into serious doubt.
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: 11.12.2009 |
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The Turkish economy began contracting in the last quarter of 2008, sending unemployment soaring and widening the budget deficit to about six times what was planned before the global crisis struck.
Turkey’s gross domestic product, or GDP, contracted 3.3 percent on an annual basis in the third quarter this year. Downward revisions by the Turkish Statistics Institute, or TurkSat, for the first and second quarters, however, have put overall growth targets for the year into serious doubt.
GDP fell 3.3 percent from the year-earlier period, TurkStat said Thursday on its Web site. The median estimate of 13 economists surveyed by Bloomberg was for a drop of 3.7 percent. But TurkStat revised the contraction for the second quarter to 7.9 percent and the decline for the first quarter to a record 14.7 percent. The previous figures were 7 percent and 14.3 percent, respectively.
The economy began contracting in the last quarter of 2008, sending unemployment soaring and widening the budget deficit to about six times what was planned before the global crisis struck. Prime Minister Recep Tayyip Erdoğan has resisted International Monetary Fund, or IMF, loans, relying on higher Treasury borrowing to fund tax cuts and spending increases aimed at reviving growth.
“The [revisions] will negatively affect GDP figures for the whole of the year, but as they have dropped the base, the effect for 2010 will be positive,” said Fatma Melek, chief economist at Akbank.
“We expect a 6 percent contraction this year and 4 percent growth for next year,” Melek told Hürriyet Daily News & Economic Review on Thursday. “But this will be a result of the base effect, not an outcome of sound recovery.”
Slump in private sector:
Private consumption could gain only 0.9 percent in the third quarter, losing steam after government incentives boosted consumption in the second quarter. “Investment expenditure is still weak,” Melek said. “Private sector investments retreated 34 percent and 29 percent in the first and second quarters respectively, and in the third quarter they declined 19 percent on an annual basis. Uncertainties in demand continue and capacity utilization rates are at levels that could meet short-term rises in domestic and global demand. We expect GDP to return to positive territory in the fourth quarter.”
According to a TurkStat statement on Thursday, manufacturers’ November capacity utilization declined from the previous month. Manufacturers used 70.7 percent of their capacity last month compared with 71.8 percent in October. Companies were expected to use 71.2 percent of their capacity in the month, according to a Bloomberg survey of seven economists.
Taking the revisions into consideration, GDP contraction in the first three quarters is 8.4 percent. But Güldem Atabay, economy and policy research chief at Ekspres Invest said she expects 1.9 percent GDP growth in the fourth quarter.
“The recovery in private consumption is to continue at slow motion,” she told the Daily News. “The surprise of the fourth quarter can stem from inventories. Given the … revisions, we revised our 2009 GDP contraction prediction to 6.1 percent, from 5.6 percent.” Ekspres Invest has revised its 2010 growth prediction to 3.5 percent, from 3.1 percent.
Positive for the future:
Marco Annunziata, chief economist at Unicredit Group in London, said he finds the data very encouraging. “[The figures] support my expectation that Turkey will enjoy the strongest recovery in 2010 among emerging European countries,” he told the Daily News.
“GDP recovered significantly in the third quarter compared to the previous period, with the recovery in external demand conditions as well as with the improvement in both domestic consumption and investment demand,” Bloomberg quoted Nurhan Toğuç, chief economist at Ata Securities, as saying. Recent inflation and industrial output data may encourage the Central Bank to halt the rate cut sequence when it meets on Dec. 17, Toğuç said. The inflation rate rose more than expected to a five-month high of 5.5 percent in November, while industrial production jumped 6.5 percent in October from a year earlier, the first increase in 15 months.
Banking provides added value:
Boosted by good weather conditions, the contribution of agriculture continues for overall growth. “Despite the high base effect, the sector managed to post growth again in the third quarter,” said Banu Kıvcı Tokalı, an independent economist. “But its small share [in GDP] limits its positive effect on the overall figure.”
“Another contribution is the financial sector,” Tokalı told the Daily News. “The positive effect of a low-interest environment is openly seen in the rise in the added value of banking.”
On the spending front, investment spending continues to decline, while the drop in private consumption spending has “nearly stopped,” Tokalı said. “The public sector is trying to slow the contraction through consumption spending, a phenomenon that might be seen more clearly in the last quarter.”
The rise in inventories gives hope at the first glance, but an important portion of this trend is seasonal, she warned. “The real trend will be seen in the fourth quarter.”
Tokalı predicted the economy would contract 5.5 percent this year.
SOURCE: HURRIYETDAILYNEWS
Thursday, December 10, 2009
Turkey’s gross domestic product, or GDP, contracted 3.3 percent on an annual basis in the third quarter this year. Downward revisions by the Turkish Statistics Institute, or TurkSat, for the first and second quarters, however, have put overall growth targets for the year into serious doubt.
GDP fell 3.3 percent from the year-earlier period, TurkStat said Thursday on its Web site. The median estimate of 13 economists surveyed by Bloomberg was for a drop of 3.7 percent. But TurkStat revised the contraction for the second quarter to 7.9 percent and the decline for the first quarter to a record 14.7 percent. The previous figures were 7 percent and 14.3 percent, respectively.
The economy began contracting in the last quarter of 2008, sending unemployment soaring and widening the budget deficit to about six times what was planned before the global crisis struck. Prime Minister Recep Tayyip Erdoğan has resisted International Monetary Fund, or IMF, loans, relying on higher Treasury borrowing to fund tax cuts and spending increases aimed at reviving growth.
“The [revisions] will negatively affect GDP figures for the whole of the year, but as they have dropped the base, the effect for 2010 will be positive,” said Fatma Melek, chief economist at Akbank.
“We expect a 6 percent contraction this year and 4 percent growth for next year,” Melek told Hürriyet Daily News & Economic Review on Thursday. “But this will be a result of the base effect, not an outcome of sound recovery.”
Slump in private sector:
Private consumption could gain only 0.9 percent in the third quarter, losing steam after government incentives boosted consumption in the second quarter. “Investment expenditure is still weak,” Melek said. “Private sector investments retreated 34 percent and 29 percent in the first and second quarters respectively, and in the third quarter they declined 19 percent on an annual basis. Uncertainties in demand continue and capacity utilization rates are at levels that could meet short-term rises in domestic and global demand. We expect GDP to return to positive territory in the fourth quarter.”
According to a TurkStat statement on Thursday, manufacturers’ November capacity utilization declined from the previous month. Manufacturers used 70.7 percent of their capacity last month compared with 71.8 percent in October. Companies were expected to use 71.2 percent of their capacity in the month, according to a Bloomberg survey of seven economists.
Taking the revisions into consideration, GDP contraction in the first three quarters is 8.4 percent. But Güldem Atabay, economy and policy research chief at Ekspres Invest said she expects 1.9 percent GDP growth in the fourth quarter.
“The recovery in private consumption is to continue at slow motion,” she told the Daily News. “The surprise of the fourth quarter can stem from inventories. Given the … revisions, we revised our 2009 GDP contraction prediction to 6.1 percent, from 5.6 percent.” Ekspres Invest has revised its 2010 growth prediction to 3.5 percent, from 3.1 percent.
Positive for the future:
Marco Annunziata, chief economist at Unicredit Group in London, said he finds the data very encouraging. “[The figures] support my expectation that Turkey will enjoy the strongest recovery in 2010 among emerging European countries,” he told the Daily News.
“GDP recovered significantly in the third quarter compared to the previous period, with the recovery in external demand conditions as well as with the improvement in both domestic consumption and investment demand,” Bloomberg quoted Nurhan Toğuç, chief economist at Ata Securities, as saying. Recent inflation and industrial output data may encourage the Central Bank to halt the rate cut sequence when it meets on Dec. 17, Toğuç said. The inflation rate rose more than expected to a five-month high of 5.5 percent in November, while industrial production jumped 6.5 percent in October from a year earlier, the first increase in 15 months.
Banking provides added value:
Boosted by good weather conditions, the contribution of agriculture continues for overall growth. “Despite the high base effect, the sector managed to post growth again in the third quarter,” said Banu Kıvcı Tokalı, an independent economist. “But its small share [in GDP] limits its positive effect on the overall figure.”
“Another contribution is the financial sector,” Tokalı told the Daily News. “The positive effect of a low-interest environment is openly seen in the rise in the added value of banking.”
On the spending front, investment spending continues to decline, while the drop in private consumption spending has “nearly stopped,” Tokalı said. “The public sector is trying to slow the contraction through consumption spending, a phenomenon that might be seen more clearly in the last quarter.”
The rise in inventories gives hope at the first glance, but an important portion of this trend is seasonal, she warned. “The real trend will be seen in the fourth quarter.”
Tokalı predicted the economy would contract 5.5 percent this year.
SOURCE: HURRIYETDAILYNEWS
Thursday, December 10, 2009
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