Turkey's gross domestic product (GDP) clinched 11 percent growth, amounting to TL 25.90 billion, in the January-March period of this year over the same months of a year ago, making the country the world's fastest growing country during this period.
Turkey seems not to have retreated from the noteworthy growth of 8.9 percent witnessed in 2010. The better-than-expected growth figures were immediately put under the spotlight by the government. “As the global financial crisis has shaken many developed countries, Turkey managed to clinch a record-high growth figure. We have become the world's fastest growing economy,” Prime Minister Recep Tayyip Erdoğan said during a parliamentary group meeting. Foreign Trade Minister Zafer Çağlayan told the CNBC-e station when the figures were revealed that he expects the year-end growth figure will be around 7 percent. The Turkish Statistics Institute (TurkStat) released its quarterly growth rates on Thursday, indicating that the economy had continued to grow for the sixth straight quarter. The growth rate was in double digits, even surpassing market expectations, which were around 10 percent.
Accordingly, Turkey’s GDP amounted to TL 25.90 billion at constant prices in the first three months of the year, 11 percent higher than a year earlier, when the economy grew by 11.7 percent.
Private consumption topped the components contributing to the GDP in the first quarter, with around 75 percent. The total amount of money Turkish households spent in Turkey and abroad was TL 211.6 billion and TL 1.9 billion, respectively, while foreigners visiting Turkey spent TL 6.6 billion in the mentioned period. On the other hand, the private consumption, or in another words investments, were TL 1 billion more -- TL 8.44 billion -- in the given period over the same period a year ago. TurkStat showed that TL 8 billion of these investments were made in the construction sector while 437 million was spent on machinery and other equipment.
“Bunker busting numbers, these,” Timothy Ash, an economist at RBS, said in a written statement to the press. “Turkey’s economy is growing really fast. It has transformed into an ‘Asian Tiger.’ I think the year-end growth figures could be revised upwards to 7 percent with this development,” he added. Analyst Abdulkadir Çakır also shared similar views. “These numbers are really sensational,” he told Today’s Zaman. “The significant recovery in the Turkish economy is still going on, supported by foreign capital inflows from developed countries and a strong political and financial stability.” But, Çakır underlined that this speedy growth also has side effects, stating that it was mainly driven by continuing domestic demand widening the current account deficit (CAD) by over $60 billion in 2011 -- a sign of an overheating economy -- an issue that should be given priority as soon as possible.
Central Bank Governor Erdem Başçı has been trying to slow growth toward the government target of 4.5 percent this year by restricting consumer credit. The central bank has raised reserve requirements four times since December 2010 in order to reduce the money available to lend while cutting the interest rate. Another analyst talking to the daily, Gökhan Delioğlu from Bizim Securities, also underlined that domestic demand, despite the central bank measures, is still growing. “We forecast 10 percent growth in the first quarter, but this number was not something we were expecting. The rise in domestic demand is the main reason behind this figure,” he noted. An analyst at French Societe Generale, Gaelle Blanchard, also said the unexpectedly high growth figure and foreign trade deficit, which was $43.8 billion in the first five months of this year, just confirms the Turkish economy has overheated. “This situation will pressure the central bank for a possible rate hike; however, if the central bank remains silent to a rate increase, the lira could depreciate more,” Blanchard said.