The Turkish economy expanded 21.7% year-on-year in the second quarter of 2021, in line with expectations, official data revealed on Wednesday.

It has been the highest annual growth rate since 1999.

The country's gross domestic product (GDP) at current prices increased 52.4% to 1.6 trillion Turkish liras ($188.6 billion) in the April-June period, according to the Turkish Statistical Institute (TurkStat).

Among the activities constituting GDP, the value added rose 45.8% in services and 40.5% in the industry, while financial and insurance activities decreased 22.7% during the same period.

Slower growth rates were seen in the construction sector with 3.1% and in agriculture, forestry and fishing with 2.3%.

According to data, final consumption expenditures for households increased 22.9% while government final consumption rose 4.2% year-on-year in the second quarter of 2021.

Exports of goods and services jumped 59.9% during the same period while imports of goods and services posted a 19.2% increase.

Low inflation, FX rate stability critical for sustainable growth

Commenting on the figures, Turkey's Treasury and Finance Minister Lutfi Elvan said on Twitter that investments and net foreign demand accounted for 57% of the growth in the second quarter of the year.

"Low inflation, exchange rate stability and predictability are critical for a sustainable and inclusive growth. We are trying to make it happen," he underlined.

"We strive to maintain a growth that will further improve fair income distribution," he concluded.

Leading economic indicators improving

Major economic indicators show economic activity rebounded with the economic confidence index jumping to 97.8 in June from 92.6 the previous month.

The upturn in the Turkish manufacturing sector also continued with a headline figure hovering above the threshold level for the third consecutive month in August.

Turkey's purchasing managers' index (PMI) for the manufacturing sector read 54.1 in August, its highest level since January.

Last month, Turkish exports hit $16.4 billion, rising 10.2% year-on-year, while imports jumped 16.8% to $20.7 billion.

On Tuesday, international credit rating agency Moody's upgraded Turkey's economic growth forecast for 2021 from 5% to 6%.
It noted that a recovery in the tourism sector supported the growth in the Turkish economy, thanks to the ongoing global economic recovery and progress in the COVID-19 vaccination.

The country posted a 7% growth year-on-year in the first quarter while the global economy is still suffering from the coronavirus pandemic.

Amid the coronavirus pandemic, Turkey was one of the several countries where negative growth did not occur and its economy grew 1.8% in 2020.

Later in the day, President Recep Tayyip Erdogan praised the country's quarterly growth.

"The second-quarter growth figure released today once again proved the dynamism, production power, and resilience of the Turkish economy," he told a graduation ceremony at the Gendarmerie and Coast Guard Academy in the capital Ankara.

"By growing 21.7% in real terms in the second quarter, the Turkish economy became the second-fastest-growing economy in the world."

He added: "With the effect of our success in exports, our current account deficit continued to decline and fell below $30 billion," he said. "Employment, on the other hand, reached its highest level in the last 35 months."​​​​​​​