Turkey's economy grew less than expected last year as domestic demand slumped, data showed on Monday, but manufacturing expanded for the seventh month in a row in March, suggesting a recovery is around the corner. Gross domestic product (GDP) grew 1.4 percent year on year in the fourth quarter, well below a Reuters poll forecast of 2.3 percent, data from the Turkish Statistics Institute showed.
In 2012 as a whole, GDP expanded just 2.2 percent, below a poll forecast of 2.6 percent, and a quarter of the 8.8 percent growth rate seen in 2011. Seasonally-adjusted, fourth quarter GDP was unchanged from the previous quarter. Economy Minister Zafer Caglayan said the 2012 growth figure was disappointing. He has been critical of the central bank for what he sees as an overly cautious monetary policy that has done too little to stimulate domestic demand.
Turkey's stellar growth in 2010-2011 was driven by credit-fuelled domestic demand, which was stunted when the central bank raised interest rates in the early part of last year to stop the current account deficit getting out of control. Finance Minister Mehmet Simsek said the economy was expected to see more balanced growth of around 4 percent this year and forecast that inflationary pressures would lessen, in a written statement following the latest growth figures.
GDP is forecast to grow 4.5 percent this year, according to a Reuters poll of 15 economists. The central bank has been trying to spur the economy since mid-2012 and embarked on a campaign of rate cuts in September. Monday's data showed per-capita GDP amounted to $10,504 in 2012, little changed from $10,444 a year earlier, but triple the $3,492 of 2002.
Turkish manufacturing expanded for the seventh month in a row in March, albeit at a slower rate than in the previous three months, underpinned by more new business locally and from abroad, a survey showed on Monday. The HSBC Turkey Purchasing Managers' Index (PMI) for manufacturing, which accounts for around a quarter of Turkish gross domestic product, fell to 52.3 in March from 53.5 in February. A figure above 50 indicates growth. According to revised figures, third-quarter growth was 1.6 percent, unchanged from initial data. Second-quarter growth was revised to 2.9 percent from 3.0 percent and first-quarter growth was revised to 3.3 percent from 3.4 percent.