Recent data showed the Turkish economy grew by 21.7% (YoY) during the second quarter. According to the Research Department at BBVA, the high carry-over impact is over 3Q onwards but the reopening, recovering tourism and exports revenues are still boosting the overall growth rate. They maintain a 2021 GDP growth forecast at 9%, with risks still on the upside.
Key Quotes:
“Base effects boosted yearly growth rates in 2Q21 as expected. Domestic demand was solid on private consumption (22.9% yoy) and investment (20.3% yoy) with contributions of 13.7pp and 5.4pp, respectively. Investment was supported by mainly machinery and equipment (35.2% yoy), which was followed by construction (12.2% yoy) and other investment (1.9% yoy). Government consumption accelerated to 4.2% yoy, implying 0.7pp contribution to GDP. The negative contribution of inventories continued for the third quarter with an acceleration to -4.9%pp.”
“If no quarterly growth is assumed for the rest of the year, a growth rate of 8.6% would be achieved in 2021. Though, manufacturing PMI accelerating to 54.1 and manufacturing capacity utilization rate (s.a.) to 76.8% in August, and continuing pick-up in electricity production so far have all indicated still solid production levels in early 3Q. Given the increasing contribution of net exports backed by the stronger external demand and recovering tourism revenues, risks are still on the upside for our above consensus 2021 GDP growth forecast of 9%.”