ISTANBUL (FFN) – Turkey’s economy expanded by just 2.5% in the second quarter of 2024, falling short of expectations as the country continues to face the effects of a year-long monetary tightening campaign. The data, released by the Turkish Statistical Institute (TUIK) on Monday, highlights a significant cooling in economic activity.
The gross domestic product (GDP) for the second quarter grew by 0.1% from the previous quarter on a seasonally and calendar-adjusted basis, according to TUIK. In a Reuters poll, analysts had forecasted an expansion of 3.2% for the quarter, with a projected growth of 3.35% for the entirety of 2024.
The report detailed sector-specific growth rates, including a 6.5% increase in construction, 3.7% in real estate activities and agriculture, forestry, and fishing, and 3.4% in information and communication. The value added in other service activities rose by 7.4%.
First-quarter growth was revised down to 5.3% from an initial estimate of 5.7%, driven primarily by strong domestic demand fueled by a minimum wage hike and consumer anticipation of future inflation.
Last year’s annual growth was also revised up to 5.1% from an initial 4.5%, despite challenges such as a slowdown in key trading partners and a devastating earthquake in February.
Since June of the previous year, Turkey’s central bank has aggressively raised its key interest rate from 8.5% to 50% in an effort to curb rampant inflation, which peaked at 75% in May but has since eased to below 62% in July, with expectations of further declines.
| Economic Indicator | Q2 2024 Growth Rate | Revised Q1 2024 Growth Rate | Annual Growth (2023) |
|---|---|---|---|
| GDP Growth | 2.5% | 5.3% | 5.1% |
| Construction Growth | 6.5% | – | – |
| Real Estate & Agriculture | 3.7% | – | – |
| Information & Communication | 3.4% | – | – |
| Interest Rate | 50% (as of Q2 2024) | – | – |
| Inflation (Peak in May 2024) | 75% | – | – |
Key Words: Turkey, economic growth, GDP, monetary tightening, interest rates, inflation.
