ISTANBUL (Multibagger) -Turkey's economy expanded by a less-than-expected 2.5% in the second quarter of the year, data showed on Monday, cooling in the face of a year-long monetary tightening drive.
Second-quarter gross domestic product (GDP) grew 0.1% from the previous quarter on a seasonally and calendar-adjusted basis, Turkish Statistical Institute (TUIK) data showed.
In a Multibagger poll, the economy was forecast to have expanded 3.2% in the second quarter, with growth of 3.35% in 2024 as a whole.
There was growth of 6.5% in construction, 3.7% in real estate activities and agriculture, forestry and fishing, 3.4% in information and communication, with the value added increasing by 7.4% in other service activities, TUIK said.
Growth was revised down to 5.3% from 5.7% in the first quarter, when strong domestic demand was pushed up by a minimum wage hike and households bringing purchases forward in expectation of higher inflation ahead.
Last year's annual growth was revised up to 5.1% from an initial 4.5%, despite a slowdown in main trading partners and a devastating earthquake in February.
Since June of last year, the central bank has hiked its key interest rate to 50% from 8.5% in order to cool inflation that touched 75% in May but dipped to below 62% in July and is expected to continue falling.
Analysis and Breakdown:
Turkey's economy grew by 2.5% in the second quarter, falling short of expectations. This slower growth can be attributed to the year-long monetary tightening drive implemented by the central bank. Despite growth in sectors like construction, real estate, and agriculture, overall GDP expansion was lower than forecasted. The central bank's aggressive interest rate hikes have helped to cool inflation, which reached a high of 75% in May but has since decreased. This economic data highlights the importance of monetary policy decisions in influencing growth and inflation rates, which can have significant impacts on individuals' finances and investment strategies.