Turkish economy expands 7.4% in 2017, beating forecasts

ANKARA- Turkey's economy expanded 7.4 percent last year, official data showed on Thursday, marking its fastest expansion since 2013 on robust growth in industry and construction, and beating market expectations.

That growth, which beat a forecast of 7.2 percent in a Reuters poll, is likely to be welcome news for President Tayyip Erdogan in the run-up to presidential and parliamentary elections in 2019.

Foreign sentiment has generally soured on Turkey, helping send the lira to a series of record lows, on concerns about politics and double-digit inflation.

Investors are particularly worried by monetary policy. Erdogan, a self-described "enemy" of interest rates, has repeatedly called for lower rates to boost growth. The bank's reluctance to increase its main policy rate has fuelled concerns that it is under political pressure.

"The biggest contribution to growth comes from domestic demand," said Muammer Komurcuoglu, research manager at Is Invest.

"On the other side of the coin, there is a high increase in imports due to strong domestic demand. The trend in imports will also be important for 2018. The current account deficit may be further pressured by this."

Fourth-quarter GDP expanded a seasonally adjusted 1.8 percent from the previous quarter, the Turkish Statistical Institute said. On a yearly basis, it grew 7.3 percent.

Third-quarter GDP growth was revised up to 11.3 percent year-on-year from an initial 11.1 percent.

"The strong course of investment and employment will continue to support growth in 2018 with domestic demand," Deputy Prime Minister Mehmet Simsek said, adding Turkey was one of the fastest-growing economies in the G-20 group of nations last year.

"Preliminary indicators for the Q1 2018 show that the growth continues to be in line with our targets."

The lira was little changed at 4.0090 to the U.S. dollar at 0736 GMT. The currency recently touched a record low of 4.0375. It is down around 5 percent against the dollar this year, making it one of the worst performing emerging market currencies.

(Reporting by Nevzat Devranoglu and Ece Toksabay Writing by David Dolan Editing by Daren Butler and Hugh Lawson) ((daren.butler@tr.com; +90-212-350 7053; Reuters Messaging: daren.butler.thomsonreuters.com@reuters.net))