Turkey's economic growth slips in third quarter

By Fatih Erkan Dogan

ANKARA (AA) - Turkey's Gross Domestic Product went down by 1.8 percent in the third quarter of 2016 compared with the same period of 2015, the Turkish Statistical Institute reported on Monday.

The figure was short of the median forecast by Anadolu Agency’s Finance Desk, which predicted a 0.15 percent contraction in the third quarter.

The GDP declined by 1.8 percent in the third quarter of 2016, compared with the same quarter of previous year, and reached 655.4 billion Turkish liras ($221.6 billion) at current prices, the report said, suggesting the economy had felt the pinch of rising political tensions in the region and the July 15 defeated coup.

Household consumption expenditures reflected the contraction, decreasing by 3.2 percent in the third quarter compared with the same quarter of the previous year. The government’s final consumption expenditure increased by 23.8 percent while the gross fixed capital formation decreased by 0.6 percent, the report showed.

Last Thursday, the industrial production index, a leading indicator of the country’s GDP performance, signaled that growth in the third quarter might be below zero.

“In light of leading indicators, it wouldn’t be a surprise to see a third quarter growth below zero. On the other hand, we don’t expect a contraction in the fourth quarter. Despite the fact that we had balanced growth expectations, we do not forecast a very strong growth in the fourth quarter,” analyst Enver Erkan from KapitalFX had said.

On Nov. 25, the World Bank revised its growth forecast for Turkey in 2016 to 3.1 percent from 3.5 percent, citing “private investment and consumption appear to have slowed down in the aftermath of the failed coup attempt”.