Latest Turkish Data: Q1 GDP and May Trade
The Turkish Statistical Institute, or TurkStat, released the first quarter (1Q11) growth (National Income Accounts) and May trade figures this morning. Here are my short thoughts on both; again, these are not meant to be substitutes for complete reports; for that, you can have a look Citi’s trade balance and growth research notes.
First, growth, with 11 percent yoy, was in line with my expectations of a two-digit figure. That is a rather broad term, but obviously, I was not expecting 99 percent growth:). In fact, although market expectations were around 9.7 percent yoy, I would have been really surprised at a single digit figure. The seasonality-adjusted figure was 1.4 percent qoq.
Looking at the general nature of growth, the first thing to notice that there is not much of an improvement in the country’s unsustainable growth path.
As for the composition of growth there isn’t much of a change from the previous quarter, either:
Strong consumption and investment, supported by pork-barrel spending. You might note that government spending’s contribution is small, but that is only because its share in GDP is small- around 15 percent for government consumption and investment: In fact, the yearly growth in “G”, while below the figures of the private sector, was still notable:
All in all, nothing we really didn’t know. We just confirmed that the economy grew really fast in the first quarter, although there is some disagreement on whether it has been overheating or not- with the Central Bank, supported by a few market economists, arguing that it is not, and the rest of the pack saying it is. I don’t know why, but somehow, this reminds me of the difference of opinion regarding the musical abilities of Cacofonix the Bard: He thinks he is a genius. The rest of the village contends he is unbearable.
Anyway, turning to the May trade deficit, I was right on target with my deficit forecast of around USD 10bn, as the actual turnout was USD 10.1bn. But as I explained in a previous post, that reflects my luck as much as forecasting skills. The picture for the past three months (Feb-Apr) was mildly inspiring, as import growth was slowly losing steam, while export growth was gaining pace. Unfortunately, that trend did not continue in May:
Finally, with the trade figures released after the tourism statistics, I have all I need for my current account forecast, which I will post in a couple of days…
2 Responses to “Latest Turkish Data: Q1 GDP and May Trade”
Re the overheating and the output gap, Adam Posen of BofE in a recent speech echoed same sentiments you have been saying for a while that "trend both matters more and is more measurable" than the classic output gap stats.
Secondly, I'm not sure if I'm reading the numbers correct but the YoY growth in Government spending is nothing to be crazy about. As far as I read QoQ growth rate for G was negative in 1Q which I think is a miracle when you consider there was a general election in June 12. Maybe government spending picked up in 2Q but I don't think it was significantly different than 1Q. But this is Turkey you never know.
Can't you also post the QoQ growth rates and GDP sector weight graphs as an update or separate post? Thanks,
Sure, I'll do your request later today. As for "G", as you note as well, G probably went up in the second quarter. And I agree that it is not too bad, but it is not as excellent as depicted by some Turkey economists, either.