By Bahattin Gonultas

ANKARA

Turkey's economy expanded at the rate of 2.9 percent in 2016, according to the Turkish Statistical Institute on Friday.

The annual growth rate was much higher than the median forecast recorded by Anadolu Agency’s Finance Desk survey, which envisaged a 2.3 percent Gross Domestic Product increase in 2016 compared with a year earlier.

Turkey's fourth-quarter GDP reading was also substantially higher than the experts’ median estimates, coming in at 3.5 percent compared with the 2.4 percent survey prediction.

These better-than-expected figures were partly related to the upward revision of previous quarters.

Analyst Enver Erkan from KapitalFX said: “In the new dataset, there are revisions on former periods. In this context, Turkey’s GDP in 2016 has been calculated at 2.9 percent. With the new dataset, we see the growth performance surpassing forecasts.

“The previous quarter [third] was a period in which growth performance suffered due to apparent causes. Last quarter became a recovery period in part due to measures implemented by the government to boost private consumption.”

According to the TurkStat report, Turkey's GDP was around 2.59 trillion Turkish liras (some $856.8 billion) in 2016, compared with 2.34 trillion Turkish liras (around $861.5 billion) the previous year.

The decline in terms of U.S. dollars was due to harsh headwinds the Turkish lira encountered last year.

The U.S. dollar/Turkish lira exchange rate was 3.02 on average last year while one dollar was traded for 2.71 liras in 2015.

The lira has witnessed harsh foreign exchange rate fluctuations in recent months. Dollar/lira rate saw a historic hike -- around 3.94 liras -- in mid-January this year.

Erkan said the resilience of private demand, which drove GDP growth, would be important in coming quarters.

“Data in the last quarter showed private consumption advancing by 5.7 percent. We should monitor whether this recovery in demand is temporary or stable. Especially performance after the referendum is vital,” he said.

In a statement released Friday, Deputy Premier Mehmet Simsek said: "We expect recovery in the last quarter of 2016 in our economy to continue throughout 2017.

“Especially after April 17 [referendum], uncertainties will decline and campaigns we had started in investments, exports and employment will pick up momentum.

"External demand will also become another factor to back growth. Leading indicators published so far over the first quarter of 2017 confirm this positive course."

Simsek also noted the challenges from last year such as the defeated coup and the currency fluctuations.

"Our country's resistance to shocks is an important proof of strong macro fundamentals of the Turkish economy," he said.

In a written statement, Finance Minister Naci Agbal said that despite the July 15 foiled coup, contraction in the tourism sector, terror attacks and fluctuations in the global markets last year, the 2.9 percent economic growth reflects the country’s success.

"After the decline in the third quarter of 2016, with the help of measurements taken by the government, the Turkish economy grew by 3.5 percent in the last quarter and exceeded expectations," Agbal said.

"This is the evidence of how Turkish economy's fundamentals remain solid and reflects a continuing dynamic growth," he added.

Deputy Prime Minister Nurettin Canikli also said the efficacy of measures implemented by the government has been confirmed by the 3.5 percent growth rate in the last quarter of 2016.

“The rate was the result of measures that were taken in order to increase domestic and foreign demand, and to prevent the liquidity problem of the markets,” Canikli said.

“No international financial institution expected such a high growth for the economy in the last quarter after the contraction in the third quarter of 2016,” he added.

The World Bank forecasted the country’s growth rate at 2.1 percent for 2016; rating agency Moody’s predicted 2 percent.