From growth data to new economic road map, busy September awaits Turkey

From growth data to new economic road map, busy September awaits Turkey

In September, a busy agenda awaits Turkey as important growth, inflation, and export data for the April-June period will be released, while the new economic program is also expected to be announced, Trend reports citing Daily Sabah.

Like most other countries in the world, the Turkish economy was near a stand-still in the second quarter as Ankara shut schools and some businesses, closed borders, and adopted weekend stay-home orders after it reported its first COVID-19 case on March 11. Some factories were closed until the economy was mostly reopened in June.

The Turkish Statistical Institute (TurkStat) will release the gross domestic product (GDP) data for the second quarter on Monday.

A median forecast of 17 economists in an Anadolu Agency (AA) survey showed the economy contracted 11% year-on-year in the April-June period. Forecasts hovered between a contraction of 7% and 15%.

The median estimate in a Reuters poll of 14 economists was for an 11.8% contraction in GDP, with estimates ranging from declines of 7.1% to 13.1%.

The Turkish economy grew 4.5% year-on-year in the first quarter of 2020, propelled by a lending spree just before the pandemic brought on a sharp downturn beginning in March.

"With the performance of the second quarter, god willing, Turkey will be one of the least affected among countries experiencing a contraction," Treasury and Finance Minister Berat Albayrak recently said on the growth projection.

The Organization for Economic Co-operation and Development (OECD) announced Wednesday that its 37 mainly wealthy member states had suffered an unprecedented 9.8% economic shrinkage in the second quarter of 2020.

The impact of the pandemic and lockdown measures far outstripped the 2.3% shrinkage in real GDP recorded in the first quarter of 2009, at the height of the financial crisis, the OECD said.

The economists in the AA survey also predicted that the country’s annual GDP in 2020 would narrow 1.8% on average – the highest at a decline of 3.8%, the lowest at a decline of 0.5%. The median estimate of 14 economists in the Reuters survey was for a contraction of 1.9% in 2020, with predictions ranged between declines of 1% and 3.8%.

In addition to the macroeconomic indicators, the details of the new economic program, which is expected to be announced in September and will be a new three-year road map of the Turkish economy, will be closely followed.

With the program, the government will determine its targets related to the main macro indicators such as inflation, employment, growth, exports and current account deficit for the period 2020-2022.

Inflation

On the other hand, eyes will also be turned toward inflation figures for August, which TurkStat will announce Thursday.

The country’s consumer price inflation rate fell to a lower-than-expected 11.76% year-on-year in July, reversing two months of rising inflation as the economy continued to emerge from the lockdown. Month-on-month, consumer prices rose 0.58%.

An AA survey of 18 economists projected the inflation rate will hit 11.88% in August. The economists also forecast monthly inflation to average at 0.96%, varying between 0.32% and 1.41%.

The Central Bank of the Republic of Turkey (CBRT) in July raised its year-end inflation forecast to 8.9% from 7.4%. It said the 1.5 percentage-point increase was driven by an upward revision in oil prices and food inflation projections.

The AA survey predicts the year-end inflation rate to reach 10.97%, with the lowest estimate at 9.80%, and the highest at 13.74%.

The government's year-end inflation target is 8.5% for 2020, as laid out last September in its new economic program, announced last September.

Exports

On Wednesday, the Trade Ministry is expected to release temporary foreign trade data for August.

The negative effects of the contraction of economies around the world due to COVID-19 were also reflected in exports, while these negative effects began to disappear in June.

Turkey’s exports in July reached the highest level of 2020 as they hit over $15 billion. The figure rose 11.5% month-on-month, hitting the second-highest July figure of all times.

Unemployment

Among others, the June unemployment rate will be announced by TurkStat on Sept. 10.

Unemployment in Turkey edged up slightly to 12.9% in May, according to official data. The figure was up 0.1 percentage points from the same month last year.

Turnover indices, retail sale indices and industrial production index, which will be announced on Sept. 14, will also be followed closely.

Turkish industrial production jumped by 17.6% month-on-month in June, reflecting the economic reopening after lockdowns. The surge was driven by improvements in all main subindices.

The course of the budget, which has been negatively affected by deferred tax payments during the COVID-19 period, will also be closely followed. Its August figures will be announced on Sept. 15.

On the same day, house sale figures, which have attracted attention with the high pace of growth in recent months, will also be revealed.

Residential property sales in the country in July saw their highest-ever monthly high with 229,357 units. Sales jumped 124.3% year-on-year in the month following the lifting of coronavirus measures and cheap loan campaigns presented by public lenders.

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