After shrinking by 10.4% in 2Q20 due to the devastating effects of the coronavirus pandemic last year, Turkey’s economy showed a recovery effect in the periodical growth in the following quarters due to factors such as government support, the effects of credit packages, and increased consumption, and is one of the few economies that recorded growth in 2020, closed the year with 1.8% growth. The 2Q21 growth performance, which was 7.2% in 1Q21 with the revised data, combined with the base effect from the bad period in 2Q21 and realized as 21.7%. Our expectation was a 21% GDP growth in this period. It is seen that the data point to the highest growth performance in the series going back to 1999.
After the coronavirus pandemic, which contracted in double digits last year and caused a great loss of economic activity, growth performance increased with interest rate cuts, government-backed loan incentives and increased support due to the pandemic in the periods following 2Q20; However, the growth that accelerated consumption also took a form that depreciated TRY and accelerated inflation. We have a tighter monetary policy and higher interest rates this year. In order to limit domestic demand, which is one of the most important factors feeding inflation, it is seen that additional macro precautionary measures will be included. This can be expected to contribute positively to inflation by limiting consumption and import trends. In fact, although interest rates seem to be the most important obstacle to growth, limiting investment formations, we cannot separate inflation, which causes interest rates, from this equation. Therefore, at the point of controlled and non-inflationary sustainable growth, prioritization on financial stability and price stability stands at a necessary point. The Central Bank believes that inflation will decline in 4Q21, despite the inflation that neutralized the current real return position with 18.95% in July. Against this; In light of current policy guidance, with high inflation risks, under Mr. Kavcıoğlu, the benchmark interest rate continued to be kept at 19%. The next meeting of the CBRT will take place on September 23.
Industrial production, PMI, sectoral confidence indices, export performance in 7 months of the year, domestic and foreign demand conditions show that growth continues to follow a good momentum. In terms of 2Q21, we can draw attention to the following details; Seasonally and business day adjusted seasonal growth remained at 0.9%. We can talk about a weaker performance in the quarter-to-quarter growth rate compared to the annual growth momentum. Of course, the fact that the data showing the quarterly change is adjusted from seasonality also has an effect on this, and there is a slowdown in the quarter that points to a certain period due to the May closure. Quarterly growth can be expected to be rapid as well, with the service sector contribution increasing cyclically with the opening in 3Q21. Current leading indicators also show that the annual growth rate may be close to the consensus estimate of 8%. While industrial production recorded annual growth throughout the year, the positive movement in confidence indices also reveals sectoral expectations that economic activity will remain strong. Of course, our reservation in terms of economic activity is the effect of Covid variants, which may pose a risk at home or abroad.
We think that the current growth forecasts of around 8% will be realized to a large extent within the framework of the current growth momentum, its effects on the next quarters periodically, strong production and export trends, and economic activity accelerated by opening up.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
