The third-quarter growth figures for the economy have been released. These numbers, significant for Turkey’s economic outlook, show how much the economy expanded compared to the same period last year. The economy grew by 6.7 percent year-on-year.
Economy Grew by 6.7%
The official growth data for Turkey have been published. According to the report, the economy expanded by 6.7 percent in the third quarter compared with the same quarter of the previous year. Household consumption rose by 9.2 percent in the third quarter, while investment increased by 22.5 percent. By sector, industry grew by 8.0 percent, construction by 6.4 percent, and agriculture by 6.2 percent during this period.
Examining the data in detail for the third quarter of 2020 and comparing it with the previous year on a chained volume index basis, finance and insurance activities rose by 41.1 percent, information and communication activities by 15.0 percent, industry by 8.0 percent, construction by 6.4 percent, agriculture by 6.2 percent, other services by 6.0 percent, real estate activities by 2.8 percent, and public administration and social services by 2.4 percent. Professional and support service activities decreased by 4.5 percent. The largest sectoral increase was seen in finance and insurance, a rise analysts attribute partly to pandemic-related effects. Increased health expenditures during this period boosted insurance activity, and gains in gold and foreign currency accounts also supported growth in the financial sector.
Government Spending Increased
By production, Gross Domestic Product (GDP) on a current price basis rose by 22.6 percent in the third quarter of 2020 compared with the same quarter of the previous year, reaching 1 trillion 419 billion 483 million Turkish lira. On a current price basis and converted to US dollars, GDP in the third quarter was recorded at 197 billion 377 million dollars.
The third-quarter growth figures also reflect an increase in the government’s final consumption expenditures. In the third quarter of 2020, government spending rose by 1.1 percent compared with the same period last year. Household consumption expenditure of resident households increased by 9.2 percent, and gross fixed capital formation rose by 22.5 percent. Goods and services imports increased by 15.8 percent in the third quarter of 2020 compared with the same quarter of the previous year, while exports fell by 22.4 percent.
Other Increases in the Third Quarter
Regarding third-quarter income-side figures, compensation of employees increased by 9.7 percent year-on-year, and net operating surplus rose by 32.1 percent. The share of compensation of employees in gross value added was 32.9 percent in the same period last year and recorded at 29.9 percent this quarter. The share of net operating surplus increased to 55.3 percent. GDP grew by 4.4 percent in the first quarter of 2020 and contracted by 9.9 percent in the second quarter. Expectations prior to the release had forecast roughly 5 percent growth for the third quarter.
The announced figures are particularly important for foreign investors. Considering the data, the results are encouraging for international capital, and markets expect a stronger economy in 2021 following these growth numbers. Early 2021 growth indicators have risen within the context of the released figures. Sectors most affected by the pandemic hope for an improved outlook next year. If vaccines prove effective and the pandemic subsides, it is anticipated that growth figures will increase further in the coming year.