Turkey GDP Growth Weakest Since 2020

(RTTNews) - Turkey's economic growth slowed to a six-year low in the second quarter, data from the Turkish Statistical Institute showed Monday.

Gross domestic product expanded 2.3 percent from the previous year after rising 2.6 percent in the first quarter. This was the weakest growth since the second quarter of 2020, when GDP shrank 10.2 percent.

Quarter-on-quarter, the economy grew at a faster pace of 1.1 percent, following a 0.3 percent rise in the preceding period.

The expenditure-side of GDP showed that household spending grew 3.5 percent on a yearly basis, while government consumption dropped 1.8 percent. Gross fixed capital formation moved up 0.6 percent.

Exports of goods and services decreased 3.4 percent and imports were down 6.4 percent in the second quarter.

ING economist Muhammet Mercan said the economy is likely to maintain a moderate growth performance in the second half of the year, increasing the risks surrounding full-year GDP growth forecast of 3.0 percent. The economist said the weaker-than-expected GDP data is also likely to reinforce expectations of policy rate cuts by the central bank. He expects the policy rate to reach 35 percent by the end of 2026.

At the July meeting, the central bank had maintained its key rate at 37.00 percent. Previously, the policy rate was slashed by 100 basis points in January.