Gökhan Kurtaran
December 13, 2017•Update: December 14, 2017
By Gokhan Kurtaran
LONDON
Turkey posting a stronger third quarter than any of the world’s 20 biggest economies has led many financial experts to reconsider modest growth projections for the year.
Turkey’s GDP grew by 11.1 percent in the three months to Sept. 30 from a year earlier, beating expectations of the world’s leading economists. The median estimate of economists in a Bloomberg survey was only 8.5 percent.
“The third quarter numbers are pretty remarkable, beating expectations. This has led to official projections of full year growth of 6.5-7 percent. Absolutely remarkable given the earlier year predictions of most analysts which was for growth of half this level,” Timothy Ash, emerging markets senior sovereign strategist at BlueBay Asset Management, told Anadolu Agency.
Ash said the strong numbers were due to a "range of factors including the underlying durability of the Turkish economy because of strong banks, healthy public finances, favorable demographics and also a pro-business culture."
He added that the fiscal stimulus, the success of the government’s credit guarantee scheme and a cheap and depreciated currency also contributed.
Cristian Maggio, head of emerging markets strategy at TD Securities added: “The numbers were unambiguously strong and surprising to the upside. For several months, we held the view that figures would have been skewed towards 7 percent, but numbers yesterday are four big figures higher, which means we have somewhat underestimated the underlying strength of the economy.”
Maggio told Anadolu Agency that the headline numbers were flattered by extremely strong base effects, as the comparison fell during the quarter when the failed coup attempt occurred last year.
“I think, in the context of understanding how strongly the economy is really expanding, we need to see the Q4 data that will be available by the end of the next quarter on March 29,” Maggio added.
“A stronger-than-expected GDP figure means growth over 2017 as a whole is more likely to come in at around 6.8 percent and we have changed our forecast accordingly (versus a previous forecast of 5.5 percent),” William Jackson, senior emerging markets economist at Capital Economics said.
“These GDP figures, coming alongside the jump in inflation in November to a 14-year high of 13 percent year-on-year, mean the central bank now looks certain to hike interest rates at Thursday’s MPC meeting. We have pencilled in a 25 base point hike in the late liquidity interest rate, to 12.5 percent," Jackson added.
