28 / 324
INTRODUCTION
28
THE WORLD AND
TURKEY IN 2014
TURKISH ECONOMY
TURKEY’S GDP GREW 1.7% IN 3Q 2014
Turkey’s GDP grew 1.7% in constant prices in 3Q 2014
compared with the same quarter in 2013. In the first
two quarters of the year, the Turkish economy expanded
respectively at rates of 4.8% and 2.2% compared to
the first two quarters of 2013. In the first nine months
of 2014, the economy grew by 2.8%, recording a lower
growth rate than the same period of 2013, which stood at
4.0%. In the first three quarters, GDP at current prices was
up 11.9% on the same period of the previous year. GDP
data showed a lower than expected performance in 3Q
2014. According to seasonally-adjusted data for GDP, the
growth rate in the third quarter fell short of expectations
despite the increase in the second quarter.
Having grown by 5.3% annually and contributing to GDP
growth by 3.7 points in 2013, household consumption
expenditures grew by 1.9% in the first three quarters
of 2014 over the same period of the previous year,
contributing the GDP growth by 1.3 points. Representing
72.4% of GDP in this period, household consumption
expenditures accelerated in the third quarter, though still
underperforming expectations. The largest contribution
to growth in the first nine months of 2014 was from
net exports, with 2.5 points. Although vulnerabilities in
the Eurozone resurfaced in the middle of the year, the
depreciation of the Turkish lira over the preceding year
positively affected exports and became a determining
factor in reducing imports.
Public consumption expenditures grew by 6.0% in the
first three quarters of 2014 on the same period of the
previous year, contributing to GDP growth by 0.6 points
and constituting 10.7% of GDP. While public investment
expenditures slowed by 0.7% in 2014 compared with
2013, private sector investments declined by 1.7%.
Investment expenditures subtracted 0.4 percentage points
from total GDP growth. The slowdown in private sector
investments in the first two quarters was over in the third
quarter, indicating that dynamism in the private sector
may have increased in the last quarter of 2014.
The services sector comprised 58.6% of GDP in the first
nine months of 2014, up 3.3% on the same period of
the previous year. Growth in the services sector in the
first three quarters of 2014 was below the 4.1% growth
recorded over the same period of the previous year. With
the second biggest share in GDP standing at 24.3%, the
manufacturing industry showed improved performance
with a 3.5% growth rate compared with the same period
of the previous year. One of the major developments in
2014 was the negative effect of drought on the agriculture
sector. The sector’s share in GDP was 8.9% in the first
three quarters of 2014, which contracted by 3% and
subtracted 0.3 percentage points from GDP growth.
In general, real GDP growth data reveals that the increase
in growth in the first quarter of 2014 compared to
2012 and 2013 gradually slowed down in the second
and third quarters. The elections that were held in the
early part of the year positively affected growth, but
subsequently, tensions between Russia and Ukraine
as well as geopolitical problems emerging from the
Middle East negatively impacted investment spending
and the stock market. Since the implementation of the
restrictions imposed by the BRSA in February 2014 that
aim to increase household savings by slowing down
the growth of retail loans, there was a clear slowdown
in consumption starting in the second quarter. The
agricultural production level also decreased for the first
time since 1Q 2009 due to the drought, which was the
worst in 15 years. This should lead to high agricultural
production growth in 2015 due to the drought-induced
low base effect.
In the first nine months of 2014, GDP at
current prices was up 11.9% compared to the same
period a year earlier.
The loss of value
in the Turkish lira
positively affected
exports while reducing
imports.