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Turkey´s Q2 GDP surges 8.8 pct to $15.5 bln
1.       tunci
7149 posts
 12 Sep 2011 Mon 02:54 pm

Turkey´s Q2 GDP surges 8.8 pct to $15.5 bln

12 September 2011, Monday / TODAYSZAMAN.COM

Turkey´s gross domestic product (GDP) clinched an 8.8 percent growth rate, amounting to $15.5 billion, in the April-June period of this year over the same period a year ago, maintaining the strong performance it has displayed over the past months.
 

Statistics show that Turkey has been the world´s second-fastest growing country during this period following China. The Turkish Statistics Institute (TurkStat) released its quarterly growth rates on Monday, indicating that the economy had continued to grow for the seventh straight quarter.

Turkey enjoyed 11 percent growth in the previous quarter, the world´s fastest growth rate in that period. The government expects a growth rate of 6 percent for 2011. Deputy Prime Minister Ali Babacan earlier said the government maintained its commitment to “strong but modest” economic growth this year.

The Turkish economy suffered a 4.8 percent contraction in 2009, when global financial turbulence ravaged world economies, over the preceding year. Thanks to a strict adherence to a disciplined monetary policy, timely measures taken by the Central Bank of Turkey and intensive investment from the private sector, the economy was able to bounce back faster than foreseen from the 2009 crisis.

Growth projections were around 7-7.5 percent for the second quarter.

 

Note : this growth should contunie at least in the next two decades..



Edited (9/12/2011) by tunci

2.       si++
3785 posts
 12 Sep 2011 Mon 05:26 pm

 

Quoting tunci

Note : this growth should contunie at least in the next two decades..

 

Why and for what? The central bank is taking measures to slow it down.

 

Actually it is slowing down but it may not be enough to correct the imbalances of the Turkish economy.  Turkia has a huge account deficit and was vulnerable to external shocks and a reduction in capital flows, since about 60 per cent of the deficit is financed by portfolio inflows and the unidentified items central banks label as net errors and omissions ("net hata noksan"). Those items are the least reliable financing for the current account deficit, it’s unreliable short term capital.


3.       tunci
7149 posts
 12 Sep 2011 Mon 06:58 pm

 

Quoting si++

 

 

Why and for what? The central bank is taking measures to slow it down.

 

Actually it is slowing down but it may not be enough to correct the imbalances of the Turkish economy.  Turkia has a huge account deficit and was vulnerable to external shocks and a reduction in capital flows, since about 60 per cent of the deficit is financed by portfolio inflows and the unidentified items central banks label as net errors and omissions ("net hata noksan"). Those items are the least reliable financing for the current account deficit, it’s unreliable short term capital.


 

 Yes, there are  vulnerabilities and side effects of it but in long term I believe  it will find its balance and turn into healthy growth under the good management.

 

4.       si++
3785 posts
 12 Sep 2011 Mon 07:03 pm

 

Quoting tunci

 

 

 Yes, there are  vulnerabilities and side effects of it but in long term I believe  it will find its balance and turn into healthy growth under the good management.

 

 

So what do you mean by "this growth should contunie at least in the next two decades"? What is good for?

5.       tunci
7149 posts
 12 Sep 2011 Mon 07:05 pm

 

thats simple, its good for confidence and stability for Turkish Economy in long term .

 

 



Edited (9/12/2011) by tunci

6.       si++
3785 posts
 13 Sep 2011 Tue 05:36 pm

The growth in the Turkish economy is based on spendings. With the weakened TL against USD and Euro because of a central bank push to cut interest rates to rein in the country’s yawning current account deficit, domestic demand will fall which accounts for 70% of the GDP.

 

There are signs that the Turkish consumer is thinking twice about getting deeper in the red. In the past two years the ratio of household debt to household disposable incomes has risen rapidly, from 35 per cent to 45 per cent. (Source Burcu Unuvar, İş Invest)

7.       si++
3785 posts
 16 Sep 2011 Fri 11:47 am

More detailed explaination on the latest growth figure:

 

The same-day release of data on Turkey’s second quarter economic growth and July’s current account deficit has provided an opportunity to see the pros and cons of the economy’s performance, while also underlining how the two sets of data are intertwined.

Gross domestic product growth in the second quarter was 8.8 percent on an annual basis – much higher than expectations of a 6.5 percent rise. Seasonally adjusted data points toward a 1.3 percent rise in GDP compared to the previous quarter; smaller than the 1.7 percent in the first quarter but an impressive increase nevertheless. Also of note is the upward revision of annual growth in the first quarter, from 11 to 11.6 percent. This is in stark contrast with the downward revisions we have become accustomed to coming from developed economies.

A breakdown of the data yields more interesting results. The contributions from private consumption and investment spending are 6.3 and 6.6 percentage points, respectively. Public spending has had a contribution of 1.1 percentage points.

On the other side of the coin lies the traditional killer of potential growth: The contribution of “net exports” has been minus 5.2 percentage points.

Thus, private domestic spending is the locomotive of Turkey’s growth, while net exports (exports minus imports) is once again negative, acting as the main drag on expansion.

That drag was laid bare in the current account data: As of July, the seven-month cumulative current account gap, which puts the robust growth outlined above to the mercy of foreign capital, stands at $50.7 billion. This corresponds to an alarmingly high 11.7 percent of GDP. “If we take first-half growth as 100, 11.7 of that comes from the current account deficit - the dollars that we brought in from abroad and spent,” explains Güngör Uras in his Milliyet column.

The financing of this deficit, meanwhile, has turned into a puzzle. Central Bank data show that in the first seven months of 2011, $10.6 billion in “unaccounted for” foreign cash entered Turkey - making its appearance under the “net errors and omissions” title. Speculation abounds as to the source of this cash, but cash fleeing from Middle East revolutions is a compelling explanation. In that sense, data from the Bank for International Settlements - Quarterly Review report, which remains under embargo as I write this column, should be watched carefully.

The rest of the financing picture is also complicated: In the first seven months, foreign direct investment, which is deemed stable capital, totals only $2.6 billion. Foreigners have sold equities to the tune of $672 million in the period, while the amount of foreign investments in government bonds stands at $17.3 billion. An exposure of this kind to short-term foreign investment should be a matter of separate discussion.

All recent domestic financial crises happened because of a current account deficit running too high - we may elaborate on these past crises later on. But that’s why many local and foreign economists are “obsessive” with this issue. History does not have to repeat itself - today’s global and domestic conditions have their own dynamics. Nevertheless, if Turkey fails to address the root of the problem, this gap will continue to hang over economic growth like the Sword of Damocles.

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