Growth In Turkey Moderates

These large impact of inventories in recent quarters likely reflect some measurement problems.

Breakdown of GDP

(Click on image to enlarge)

Finally, net exports remained a drag, reducing the headline growth by another 0.6ppt in the last quarter, though the adverse impact on the headline was moderated in comparison to previous quarters. This is attributable to a small rise in imports by 0.6% YoY given that exports were practically unchanged.

In the sectoral breakdown, all sectors except construction have lifted the headline growth showing a continuation of the broad-based recovery. Among positive drivers, industry was again the biggest contributor, pulling the fourth quarter performance up by 2.0ppt, followed by services with 1.1ppt which is a surprising performance given return of pandemic-control restrictions in early-November.

Overall, the data showed the continuation of the rebound from pandemic induced recession despite the revival of quarantine measures with the second wave in the Covid-19 pandemic. Despite some moderation over 3Q, 4Q GDP performance has remained strong driven by private consumption, gross fixed capital formation, and government expenditures while contributions of net exports and inventory were in negative territory.

The latest activity indicators hint at a strong start to this year and the carry-over effect from the last year should keep yearly growth high, though the pace of activity will likely lose momentum given significant policy tightening by BRSA and the central bank along with ongoing uncertainty.

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