|11 September, 2018

Turkey: Q2 GDP data shows slowing economy

Eirini Tsekeridou has been a member of the Fixed Income Research team since February 2008. She started with high yield bonds in W. Europe and the US and currently focuses on issuers from Turkey and the Middle East. Eirini holds a Bachelor’s degree in Business Administration and a Master’s degree in Finance & Accounting from the University of Macedonia in Thessaloniki, Greece and earned her Master in Business Administration (MBA-HSG) from the University of St.Gallen, Switzerland in late 2007.


The lira depreciation helped spur a recovery in exports

Yesterday, Turkey’s second-quarter GDP (gross domestic product) data showed an expansion of 5.2 percent year-on-year (y/y), similar to consensus (5.3 percent), but lower than the 7.3 percent y/y in the first quarter.

Household consumption increased by 6.3 percent y/y and government consumption by 7.2 percent. Furthermore, the data showed a recovery in exports (growth 4.5 percent y/y), which should get more pronounced in Q3 due to the lira depreciation making imports less attractive.

We expect GDP growth at 4.5 percent in 2018 and 2.5 percent in 2019. We still expect the Central Bank of Turkey to hike rates at its meeting on Thursday in order to restore investor confidence in its independence. Analysts expect a rate hike of up to 500 basis points.


We are waiting for more evidence that the government will allow the central bank to conduct a stabilisation policy before changing the rating on Turkish sovereign bonds.

Any opinions expressed here are the author’s own.

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