Global| Dec 10 2004Turkish GDP Falls, but Inflation Below 10% for a Second Quarter
Summary
GDP in Turkey, published today by the State Institute of Statistics, fell by 6.3% in Q3. This is the steepest quarterly decline since 1994; however, by itself, the drop would seem little cause for alarm. The Turkish economy is very [...]
GDP in Turkey, published today by the State Institute of Statistics, fell by 6.3% in Q3. This is the steepest quarterly decline since 1994; however, by itself, the drop would seem little cause for alarm. The Turkish economy is very volatile; since the beginning of 2000, quarterly growth has averaged 0.9%, but it has had a standard deviation of 3.5%! In Q3, consumer spending on durable goods fell after two strong quarters and business capital investment fell after a two-and-a-half-year run-up that averaged 8.6% a quarter. So the Q3 drop occurred in volatile items in an already volatile environment.
The erratic behavior of the Turkish economy probably has many causes. One of them is surely the substantial structural inflation. In the table below, we show the GDP price deflator. Its latest figure, 317,129, is an index which was 100 in 1987. This inflation trend has been slowing down, though, and the last two quarters show year-on-year increases less than 10%, the first under double-digits since this data began in 1987.
The weakest industries in Q3 were forestry and wholesale and retail trade. Manufacturing and transportation also saw declines. Turkey has been known for millennia as a trading center, particularly the huge port of Istanbul. This is reflected in the industrial structure of the economy today. Transportation, communications and trade together constituted almost 34% of GDP in Q3; in the Euro-Zone by contrast, activity in these sectors was only 21% of the region's GDP. So declines in trading activity exert a considerable brake on overall Turkish performance.
Data on Turkey are contained in Haver's EMERGEMA database.
| Q3 2004 | Q2 2004 | Year Ago | 2003 | 2002 | 2001 | |
|---|---|---|---|---|---|---|
| GDP (Bil.1987 Turkish Lira) | 32,875 | 35,100 | 31,484 | 125,788 | 118,923 | 110,268 |
| % Change | -6.3 | 3.0 | 4.5 (yr/yr) | 5.8 | 7.8 | -7.8 |
| GDP Deflator (Index, 1987=100) | 319,129 | 300,490 | 290,988 | 284,561 | 232,779 | 169,299 |
| % Change | 5.5 | 0.0 | 9.1(yr/yr) | 22.2 | 37.5 | 58.5 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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