World Economic outlook - Turkey economic growth Q2 2012 : Turkey’s economy expanded at the slowest pace since 2009 in the second quarter, reinforcing expectations of a rate cut from the central bank.
Gross domestic product grew 2.9 percent in the second quarter from a year earlier, slower than the median estimate of 3.1 percent in a Bloomberg survey of 12 economists, the state statistics office in Ankara said on its website today. First- quarter growth was revised to 3.3 percent from 3.2 percent.
Turkey expanded 8.5 percent in 2011, making it the world’s third-fastest-growing Group of 20 economy behind China and Argentina, and prompting the central bank to tighten policy to rein in bank lending. This year’s slowdown, partly driven by the slump in Turkey’s main European export markets, may lead Governor Erdem Basci to reverse course and cut rates in order to bolster the economy.
“We anticipate that the central bank will reduce the upper end of the interest-rate corridor by at least 50 basis points at the next meeting of the Monetary Policy Committee in order to support slowing economic activity,” Ali Cakiroglu, a strategist at HSBC Asset Management in Istanbul, said in an e-mailed note.
Yields on two-year benchmark debt retreated two basis points, or 0.02 percentage point, to 7.33 percent at 2 p.m. in Istanbul, declining for a fifth day to the lowest level since January, 2011. The lira weakened 0.2 percent to 1.8007, its first decline in four days.
Falling Short
Growth may fall short of this year’s 4 percent target due to the crisis in Europe, Deputy Prime Minister Ali Babacan said on Aug. 9.
Basci introduced a dual interest-rate policy in October last year that allows him to vary rates on a daily basis between a benchmark rate of 5.75 percent and a higher rate of 11.5 percent. He says the system gives the central bank flexibility to manage the goals of bolstering growth, bringing down inflation and stabilizing the currency.
The economy grew 1.8 percent on a quarterly basis when adjusted for seasonality and the number of working days, the statistics office said today. That compares with a quarter-on- quarter contraction of 0.1 percent in the first quarter.
In a separate data release, the agency said that industrial production expanded 1.7 percent in July from the previous month, the fastest pace this year, and 3.4 percent from year earlier, almost double the median forecast in Bloomberg’s survey.
‘Still Having Difficulties’
That figure probably won’t alter the central bank’s plans to ease policy, said Sengul Dagdeviren, chief economist at ING Bank AS in Istanbul.
Details of the output figures show that “some of the key sectors are still having difficulties,” she said in a phone interview. As long as the central bank remains “comfortable about the inflation outlook, they will continue to ease.”
Turkey’s inflation rate dropped to 8.9 percent last month from 9.1 percent in July, and the central bank said last week that it expects a bigger decline in the fourth quarter.
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