Turkey dodged a recession as the economy returned to growth in the last three months of the year, data showed Friday, but its annual growth rate slowed sharply.
The Turkish economy rebounded with 3.8% growth in the final quarter of the year compared with the previous three-month period, when it shrank by 2.7% on a seasonally and calendar-adjusted basis, according to the Turkish Statistics Office, AFP reported.
Gross domestic product expanded by 2.9% in all of 2016, which is considerably lower than the 6.1% growth rate in 2015.
Last year’s growth was nevertheless better than the 2.3% consensus forecast of 18 economists surveyed by the state-run Anadolu news agency. Consumer spending remained strong despite political instability caused by, among other things, the fallout from a failed coup.
An increase in government spending also helped compensate for a nearly 30% drop in tourism revenues following a string of terror attacks blamed on religious extremists and Kurdish militants.
The government welcomed the latest figures ahead of a referendum on April 16 on whether to expand the powers of the president and create an executive presidency.
Strong economic growth had been one of the main achievements of President Recep Tayyip Erdogan’s decade in power as prime minister until 2014.
Deputy Prime Minister Mehmet Simsek said a real leap in growth would come on April 17 “because whether or not you want it so, the referendum is seen as a source of uncertainty. Some investors are adopting a ‘wait-and-see’ strategy.”
It was important for Turkey not to enter a “technical recession”, Simsek said in a televised interview after the GDP report. “There’s a moderate recovery in growth in the first quarter. The recovery will accelerate from the middle of the second quarter.”
“The government took some action to boost private consumption,” said Odeabank economist Sakir Turan, who had estimated 2.7% expansion from a year ago. He said government measures to ease restrictions on household demand usually have an effect with some delay, meaning faster consumption growth in 2017.
Meanwhile, the Turkish lira was trading higher at 3.64 to the US dollar, a rise in value of 0.48%.
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