Breaking news: Turkey achieved the highest growth in the new series announced since 1999, with 21.7% in the second quarter of the year. With the third strongest growth in the history of the Republic, the pre-pandemic level in national income was exceeded. It is stated that the country will reach its income target of $1 trillion in a short time with export, investment and production-oriented growth.
Turkey, which is one of the rare countries that managed to close 2020, when the world economy was shaken by the pandemic, with growth and grew by 7.2% in the first quarter of this year, almost made history in the second quarter. According to the data released yesterday by the Turkish Statistical Institute (TUIK), the economy reached the highest growth figure in the new series announced since 1999, with 21.7% in the second quarter of the year.
$1 TRILLION OF NATIONAL INCOME TARGET
The 21.7% growth of the economy raised the expectations of the business world. It is stated that the country will reach its income target of $1 trillion in a short time with export, investment and production-oriented growth.
Turkey’s 21.7% growth in the locomotive of industry and exports strengthened the expectations of the business world for the coming period. It was pointed out that necessary steps will continue to be taken to ensure that growth is sustainable, strong and inclusive. While it is emphasized that exchange rate stability and low inflation are the keys to growth that will improve income distribution, double-digit growth is expected throughout the year. Pointing out that Turkey has gained an important advantage in becoming a supply and production base with the pandemic, the business world is of the opinion that the increase in machinery-equipment investments, which has been going on for 6 quarters, will not slow down. Attention is drawn to the continuation of public-private sector cooperation for sustainable growth and increased investments. It was stated that Turkey’s national income target of $1 trillion could be reached in a short time with the change in composition, which is expected to be reflected in employment, that is, with a new model based on investment, production and exports rather than consumption.
LOCOMOTIVE EXPORT AND INVESTMENT
The base effect of last year’s double-digit contraction, and the strong boom in exports, industry and domestic consumption, became the locomotive of growth in the second quarter. While 57% of the growth in the second quarter came from investment and net foreign demand, the contribution of exports of goods and services to growth reached its highest level since 1998 with 10.8 points. On the other hand, TURKSTAT revised the growth figure for the first quarter of this year from 7% to 7.2%.
THIRD STRONGEST GROWTH
Turkey also caught the third strongest growth in the history of the Republic. The Turkish economy had grown by 32.1% in 1946 and by 23.1% in 1936. Gross domestic product, which was $760.8 billion in 2019 and decreased to $717.1 billion at the end of 2020 with the effect of the pandemic, increased to $728.5 billion in the first quarter of this year and to $765.1 billion in the second quarter. Thus, Turkey became the first country to exceed the pre-pandemic level in national income. National income per capita, which decreased to $8 thousand 599 at the end of 2020, increased to $9 thousand 150.
TURKEY IS SECOND IN OECD
With this growth performance, Turkey ranked second after England among the Organization for Economic Cooperation and Development (OECD) countries. It was third in the world ranking. The average growth of OECD country economies in the second quarter was calculated as 13%. In the said period, economic growth was recorded as 13.2% in the European Union and 13.6% in the Euro Zone. The UK was the OECD’s fastest-growing economy, with 22.2% in the second quarter. The UK shrank 21.4% in the same quarter of last year.
INDUSTRIAL IS WORKING CLICK
The record in exports, the revived domestic demand and investment appetite with the end of the closures made the industry the locomotive of growth in the second quarter of the year. Industrial production, which contracted by 15.9% in the second quarter of last year, achieved a strong growth performance with 40.5% in the second quarter of this year. The contribution of the industry to the total growth approached 7.5 points. In addition, the share of the industrial sector in national income reached its highest level in 23 years with 26%. In other words, one third of the 21.7% growth was provided by the industry. The manufacturing industry, which shrank by 17.7% in the second quarter last year, grew by 43.4% in the second quarter of this year.
LOCKDOWN IS OVER, SERVICES ARE OVERFLOWING
The services sector, which was the sector most affected by the closure due to the pandemic in the economy and shrank by 26.7% in the second quarter of last year, grew by 45.8% in the second quarter of this year. The contribution of this growth to the economy was 8.9 points. The services sector is expected to perform much better in the third quarter.
STEPPING ON THE BRAKE IN FINANCE
In the second quarter of last year, the indicator in the finance sector, which prevented the contraction in the economy from getting worse with low-interest loan campaigns, turned the other way this year. The financial sector, which grew by 32.7% in the second quarter of last year, contracted by 22.7% in the same period of this year due to the normalization steps. The financial sector restrained economic growth by 1.73 points.
CITIZENS INCREASED EXPENDITURE
The consumption of citizens, which shrank by 9.2% in 2020 with the effect of the pandemic, increased by 22.9% in the same period of this year. The contribution of citizens’ consumption to growth was 13.66 points. In the third quarter, the strong trend in the consumption of the citizens is expected to continue due to both the effect of the opening and the inflation concerns.
INVESTMENT APPEAL IS VERY STRONG
The strong course in total investments continued in the second quarter of this year as well. Investments, which grew by 20.3%, contributed 5.37 points to growth. Machinery equipment investments, which grew by 35.2%, increased for 7 consecutive quarters. Construction investments, which declined continuously for 11 quarters, increased by 12.2% in the second quarter of this year.
6.9 POINTS FROM NET EXPORTS
Exports, which broke historical records by exceeding $200 billion on an annual basis, became the main driver of growth. In the second quarter of the year, the contribution of exports to growth reached 10.78 points. Thus, for the first time in history, one third of the growth came from foreign demand. In the second quarter, the net contribution of foreign trade to growth was calculated as 6.93 points.
CITIZENS HAD THE BIGGEST DEMAND FOR AUTOMOBILES
It is seen that the increase in durable consumer goods in the consumption of citizens continues with a very high acceleration. Automobile is one of the goods that constitute the biggest demand of the citizens in durable consumption. The growth in durable consumption was 75.6%. The increase in semi-durable goods was 81.2%. Non-durable consumer goods increased by 33.5%.
FOREIGNERS UPGRADED FORECASTS
Foreigners began to raise their growth forecasts rapidly after the data. Fitch climbed from 6.3 to 7.9%, Moody’s from 5 to 6, JP Morgan from 6.8 to 8.4, Goldman Sachs from 7.5 to 9.5. Turkey’s Manufacturing Purchasing Managers Index (PMI) also reached its highest level since January with 54.1 last month.
BALANCED GROWTH WILL CONTINUE
The second-biggest growth in the G20 is again from Turkey. In the second quarter of 2021, our economy grew by 21.7%. It is also pleasing to see the impact of our industry and exports on growth. Our strong, sustainable, balanced and inclusive growth approach will continue from now on.
INCOME DISTRIBUTION WILL BE IMPROVED
57% of the second-quarter growth came from investments and net foreign demand. We strive to sustain a growth that will further improve income distribution justice.
WE GROW BY EXPORTS
Turkey continues to grow with exports. The contribution of our exports of goods and services to growth was 10.8 points. This is the highest contribution recorded since 1998.
DOMESTIC AND NATIONAL GROWTH
Services and industry led the spectacular growth of 21.7%. In other words, growth is real, and it is local and national in a way that some people cannot imagine.
NOT FROM A SINGLE CENTER
The positive contribution of domestic and foreign demand and investments to growth, as in the first quarter, is pleasing in that it points to an economy that expands with all its parameters, not an economy fed from a single center.
ALL SECTORS CONTRIBUTED
A growth in the band of 9% by the end of the year would not be a surprise. First of all, let’s look at the future more positively with this good evaluation. Almost all sectors contributed to growth. We will continue to invest, create added value and employment.
WE SHOULD NOT FEEL COMPLACENT
The second-quarter growth, powered by investment, exports and industry, started the long-range growth period. We seem to have the chance to grow by 8% or more in 2021. This strong rate of 21.7% should not make us feel complacent.
TIME TO WORK HARDER
Supports must continue for sustainable growth and increased investments. It’s time to work harder with the public and private sectors, cooperation and unity of mind for more production, investment, employment, export.
WOUNDS ARE HEALING
Looking at the data, we can close this year with 7-8% growth. Despite the epidemic, the indicators reveal the determination of the real sector to heal its wounds by not giving up on working and producing.
SUCCESS STORY
The success story of our industry since the Covid-19 outbreak continues. The need for financing is much higher than in the past, both in the period when the working capital is difficult for different reasons and when new investments are needed.
HALF OF IT IS FROM EXPORTS
The contribution of exports to growth was 10.8 points in the first half of the year. In other words, half of the growth came from exports. These figures strengthened our belief that Turkey will rise with exports. The Turkish economy will continue to grow under the leadership of exports.
THE INDUSTRY WAS THE FACE OF THE ECONOMY
We have been showing an industry and export-oriented growth performance in the economy recently. Industrial production recorded the highest growth in recent years with an average of 40.5% in the second quarter of the year and 43% in the manufacturing industry. It has become the pride of our industrial economy.
MUST BE SUSTAINABLE
It is pleasing that the Turkish economy grew by 7% in the first quarter and 21.7% in the second quarter this year. We must work for growth to be sustainable. Despite the high growth in the economy, the limited growth of the construction sector points to our problems.
Source: Sabah / Translated by Irem Yildiz