Exceeding expectations, the Turkish economy expanded by 7,4% in the first quarter of 2018, according to data released by Turkish Statistics Institute (TÜİK) on Monday.
Growth exceeded growth projections with services (10%), manufacturing (8,8%), construction (6,9%) and agriculture (4,4%) driven by a surge in domestic demand: private consumption surged by 6,7%, while public consumption grew by merely 0,5%.
That is the best quarter for the Turkish economy since 2013 and the government projects it is possible to achieve average growth of 5,5% until 2020.
Analysts expect the economy to slow down during the second quarter, but on the countdown to June 24 elections in Turkey, President Recep Tayyip Erdoğan had the opportunity to boast that Turkey is the best performer among OECD economies and second among the G-20.
Analysts are still concerned as Turkey’s current account deficit reached $5.43bn in April 2018, which marks a year-on-year increase of $1,7bn. The country’s overall balance of payments deficit stands at $57,1bn.
In the meantime, the Turkish Central Bank has raised twice its interest rates to 16.5%. to tame the depreciation of the Turkish Lira. Inflation in May was running at 12,2% with consumers feeling the dent in real purchasing power. The economy grows but that is not the government’s strong argument as the country heads to the polls.