UPDATE - Turkish economy narrows 9.9% in Q2

UPDATES WITH MORE DETAILS AND FINANCE MINISTER'S COMMENTS

By Gokhan Ergocun

ISTANBUL (AA) - Turkey's economy contracted 9.9% year-on-year in the second quarter of this year, the country's statistical authority announced Monday.

Gross domestic product (GDP) at current prices amounted to 1.04 trillion Turkish liras ($153.18 billion) in the April-June period, according to the Turkish Statistical Institute (TurkStat).

During the second quarter of the year, several economies -- including Turkey -- faced economic difficulties due to the measures to stem the COVID-19 pandemic, such as lockdowns and travel restrictions.

"Seasonally and calendar adjusted GDP with chain linked volume index decreased by 11% compared with previous quarter," the institute said.

In light of the activities constituting gross domestic product, TurkStat said, the value added increased 4% in the agricultural sector year-on-year in the second quarter.

The services -- wholesale and retail trade, transport, storage, accommodation and food service activities -- and industry sectors' value added went down 25% and 16.5% on a yearly basis.

Government final consumption expenditure dropped by 0.8 while gross fixed capital formation fell 6.1% in the second quarter of 2020 compared with the same quarter of the previous year.

"Compensation of employees are increased by 0.5% and net operating surplus/mixed income are decreased by 2.4% in the second quarter of 2020 compared with the same quarter of the previous year, respectively," the institute noted.

A group of 17 economists surveyed by Anadolu Agency on Thursday had projected the Turkish economy to narrow 11% on an annual basis in the second quarter of this year.

Economists' forecasts hovered between minus 7% and minus 15%.

The economists also predicted that Turkey's annual GDP in 2020 would contract 1.8% on average.

The country's GDP expanded 4.5% in the first quarter of this year, and 0.9% in 2019.

Before the onset of the novel coronavirus crisis, the economy was expected to grow 5% in 2020 as laid out in the country's new economic program announced last September.

During the pandemic period, almost all countries' GDP posted decreases, such as GDP has narrowed by 10.9% in the Organization for Economic Cooperation and Development (OECD) area in the second quarter of 2020 on an annual basis.

Berat Albayrak, Turkish treasury and finance minister, tweeted: "We knew that we would feel the effects of the catastrophic pandemic of the century that brought the world economies to a halt in the second quarter."

Contrary to the pessimistic expectations, Turkey's GDP ratio showed a good result compared to world countries, Albayrak said, calling the foundations of Turkey's economy “robust, dynamic and strong."

“Stressing national economic targets and employment-based production, he said: “I hope we will end the year positively with an economy model that supports its citizens.”

Turkey is determined to enter 2021 by erasing the traces of the pandemic and the country will see a "V" shaped recovery in the GDP data, the minister noted.

Albayrak also shared a chart that showed Turkey's GDP result is better than several economies, including the US (-31.7%), the UK (-22.8%), Spain (-22.1%), France (-19.2%), the EU (-14.1%), G7 (-11.9%), and Japan (-10%).