UPDATE 2-Turkish economic growth surges 7.3% in Q1 but set to cool
Oggi 11:50 - RSF
(Adds details and comment)
ISTANBUL, May 31 (Reuters) - Strong demand, manufacturing and exports helped Turkey post slightly better than expected 7.3% annual economic growth in the first quarter, data released on Tuesday showed, though fallout from a currency crisis cast a shadow over the rest of the year.
The economy has paid a price for President Tayyip Erdogan's pro-growth policies, as unorthodox interest rate cuts have undermined the lira currency - it has lost 20% against the greenback this year, and 44% last year - and inflation has soared to 70%.
Yet the banking sector expanded by 24.2% annually in the first quarter, while information and communication services grew 16.8%, helping drive overall growth, and the government expects the economy to get a further boost from tourism and exports ovedr the year. (
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Separate data showed that the trade deficit almost doubled in April, driven by a 135% jump in energy imports. In the Jan-April period it widened by 130% year-on-year. (
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Economists said the monetary easing, which cut the policy rate down to 14%, would end up hurting economic growth due to inflation running out of control and the widening current account deficit.
Yet in the first quarter, gross domestic product (GDP) expanded 1.2% compared with the previous quarter on a seasonally and calendar-adjusted basis, data from the Turkish Statistical Institute showed.
The demand was in part driven by rising prices as consumers pulled forward spending plans.
In a Reuters poll, the economy was forecast to have expanded 7.1% in the first quarter with full-year growth seen at 3%.
"We expect economic growth in Turkey to be sluggish over the rest of this year. Spillovers from the war in Ukraine and further lira weakness mean that inflation is likely to stay close to 70-80% until the very end of this year," Capital Economics said in a note.
"While the central bank is in no rush to hike interest rates to curb inflation, broader financial conditions are likely to remain tight and dampen investment," it said, even as it upgraded a full-year growth forecast to 4.3% from 0.3%.
Turkey was one of the few countries to expand in 2020, due largely to cheap loans to counter the pandemic's economic impact. The economy bounced back from the COVID-19 pandemic to grow 11% in 2021 as COVID-19 restrictions were largely lifted.
The lira
traded mostly flat at 16.425 against the dollar following the release of the data.
(Reporting by Can Sezer, Nevzat Devranoglu and Ali Kucukgocmen; Writing by Ezgi Erkoyun; Editing by Jonathan Spicer & Simon Cameron-Moore)
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