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Country Report Turkey May 2011
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HTMLEconomic performance: GDP growth accelerates to 9.2% in fourth quarter of 2010
The pace of economic growth, which had moderated in the third quarter of 2010 after a sharp recovery from the 2008-09 recession, accelerated in the final quarter of 2010. Real GDP grew by 9.2% year on year and by a calendar- and seasonally adjusted 3.6% in quarter-on-quarter terms. For 2010 as a whole, the GDP growth rate worked out at 8.9% following a contraction 0f 4.8% in 2009. The private sector remained the main driver of the recovery. Against a backdrop of relatively low interest rates and rapid credit growth, in the fourth quarter private consumption rose by 9% year on year and private-sector investment, which accounts for about 15% of GDP, expanded by a remarkable 49.5% year on year. Public-sector investment growth was also strong, but government consumption expenditure growth was restrained, increasing by 3.2% year on year in the final three months of 2010.
| Gross domestic product by expenditure | ||||||||||
| (% real change, year on year; 1998 prices; non-calendar adjusted, unless otherwise indicated) | ||||||||||
| 2009 | 2010 | |||||||||
| 1 Qtr | 2 Qtr | 3 Qtr | 4 Qtr | Year | 1 Qtr | 2 Qtr | 3 Qtr | 4 Qtr | Year | |
| Private consumption | -10.2 | -1.7 | -1.9 | 5.0 | -2.3 | 7.5 | 3.3 | 6.5 | 9.0 | 6.6 |
| Government consumption | 5.3 | -0.1 | 5.1 | 13.2 | 7.8 | 0.6 | 4.7 | -0.9 | 3.2 | 2.0 |
| Gross fixed capital formation | -27.9 | -24.5 | -18.2 | -4.2 | -19.0 | 16.8 | 28.4 | 30.0 | 42.1 | 29.9 |
| Public sector | 0.7 | -3.3 | 1.3 | -0.8 | -0.6 | 13.6 | 15.5 | 13.5 | 17.1 | 15.1 |
| Private sector | -31.2 | -28.1 | -22.0 | -5.2 | -22.5 | 17.3 | 31.4 | 34.2 | 49.5 | 38.5 |
| Exports of goods & services | -11.1 | -10.8 | -5.2 | 7.2 | -5.0 | -0.9 | 12.5 | -1.6 | 4.3 | 3.4 |
| Imports of goods & services | -31.0 | -20.6 | -11.7 | 11.0 | -14.3 | 22.0 | 19.2 | 16.2 | 25.4 | 20.7 |
| GDP | -14.7 | -7.8 | -2.8 | 5.9 | -4.8 | 12.0 | 10.3 | 5.2 | 9.2 | 8.9 |
| Quarter on quartera | -5.7 | 5.0 | 4.1 | 0.9 | - | 0.8 | 3.8 | 1.2 | 3.6 | - |
| a Seasonally and calendar-adjusted. | ||||||||||
| Source: Turkish Statistical Institute (Turkstat). | ||||||||||
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The sharp increase in domestic demand was accompanied by a further deterioration in the external balance, which shaved about 4.5 percentage points of GDP growth in 2010 as a whole. In the final quarter exports of goods and services rose by 4.3% year on year while growth of imports of goods and services accelerated to 25.4%. The reversal of the adjustment in inventories that accompanied the recession and the collapse of external demand appears to have run its course. Changes in stocks shaved 0.7 percentage points off fourth-quarter year-on-year growth. Changes in stocks made a positive contribution of 2.5 percentage points in 2010 as a whole following a reduction of a similar size in 2009.
| Gross domestic product by production—selected sectors | ||||||||||
| (% real change, year on year; 1998 prices) | ||||||||||
| 2009 | 2010 | |||||||||
| 1 Qtr | 2 Qtr | 3 Qtr | 4 Qtr | Year | 1 Qtr | 2 Qtr | 3 Qtr | 4 Qtr | Year | |
| Agriculture, hunting & forestry | -1.3 | 6.4 | 4.4 | 2.4 | 3.7 | 0.6 | 1.3 | -0.1 | 4.3 | 1.2 |
| Manufacturing | -22.4 | -11.7 | -4.4 | 12.7 | -7.2 | 21.4 | 15.7 | 7.6 | 11.3 | 13.6 |
| Construction | -18.5 | -20.9 | -18.2 | -6.5 | -16.1 | 8.3 | 20.4 | 22.1 | 17.5 | 17.1 |
| Wholesale & retail trade | -26.4 | -15.2 | -7.1 | 10.4 | -10.4 | 20.5 | 13.9 | 7.3 | 13.1 | 13.3 |
| Hotels & restaurants | 2.9 | 1.8 | 4.7 | 4.0 | 3.7 | -1.1 | 2.5 | 0.7 | -0.9 | 0.3 |
| Financial intermediation | 10.6 | 7.5 | 7.8 | 8.3 | 8.5 | 4.4 | 7.3 | 6.3 | 10.3 | 7.2 |
| Transport, storage & communication | -16.4 | -10.2 | -4.8 | 2.9 | -7.2 | 12.1 | 10.4 | 6.9 | 12.9 | 10.5 |
| GDP | -14.7 | -7.8 | -2.8 | 5.9 | -4.8 | 12.0 | 10.3 | 5.2 | 9.2 | 8.9 |
| Source: Turkstat. | ||||||||||
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All major sectors of the economy contributed to growth in the final quarter of 2010. The largest increases in gross value added came from the most cyclical sectors, construction and manufacturing. Financial services, one of the few sub-sectors to record strong growth during the 2009 recession, saw the rate of expansion accelerate in the final quarter of 2010. However, gross value added in hotel and catering services contracted by 0.9%, partly reflecting the impact of sluggish Western tourism markets. Growth in public services was also minimal, in line with the government's spending restraint.
