Turkey's economy grew 3.8 percent in the second quarter, the statistics office said Thursday, beating expectations in a rare piece of good news as the country battles high inflation and a tumbling currency. Driven by a 5.6 percent rise in consumer spending from the same period the year earlier, the reading for the second quarter came in well above the market consensus of just under three percent.
The auto sector and exports were weak however, largely due to widescale strikes at major car plants. First half growth was 3.1 percent over the same period in 2014. The economy had expanded 2.5 percent in the first quarter, and economists had been predicting that Turkey was heading for a period of mediocre growth.
The country is also beset by persistently high inflation of over seven percent and the declining lira, which has lost over 30 percent in value against the US dollar since the start of the year. "The sharp pick-up in Turkish GDP growth in Q2 provides some rare good news for the economy," said William Jackson, senior emerging markets economist at Capital Economics in London. "However, we think this is likely to be temporary and higher inflation and tighter monetary policy will cause growth to weaken again over the coming quarters."
Growth was 2.9 percent in 2014, with several economists predicting that the high growth levels seen in the first years under prime minister turned president Recep Tayyip Erdogan were now at an end. This year non-economic factors are also causing a shadow, with the country facing snap elections on November 1 and the government waging a relentless campaign against Kurdish rebels.
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