Turkey’s annual economic growth in the first quarter was 7.3 percent, slightly higher than predicted, according to figures released on Tuesday, powered by solid demand, manufacturing, and exports, despite the fact that the effect from a currency crisis is projected to calm things down later this year.
Last year, following a series of unconventional interest rate cuts that precipitated a lira crash in December, President Tayyip Erdogan established a policy that prioritises economic growth, employment, investment, and exports.
According to economists, the policy rate decrease to 14% might stifle economic growth in 2022 by causing inflation to skyrocket to 70%.
On a seasonally and calendar-adjusted basis, however, GDP increased 1.2 percent in the first quarter compared to the previous quarter, according to figures from the Turkish Statistical Institute.
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Rising prices contributed to increased demand and spending.
According to a Reuters poll, the economy grew 7.1 percent in the first quarter, with full-year growth expected at 3%, as rising energy prices owing to the Ukraine conflict weigh on the current account, budget, and inflation outlooks.
Turkey was one of the few countries to expand in 2020, owing to low-cost loans used to mitigate the economic effects of the epidemic. COVID-19 limitations were mostly repealed in 2021, allowing the economy to recover from the pandemic and grow at an annual rate of 11%.
Following the announcement of the statistics, the lira TRYTOM=D3 remained unchanged versus the dollar, trading at 16.3995. This year, the currency has lost 20% against the greenback, compared to 44% last year.
According to other data, the trade gap nearly doubled in April, owing to a 135 percent increase in energy imports. The trade gap grew by 130 percent year over year from January to April.
