The Turkish economy exceeded expectations by growing 7.4 percent in the first quarter over the same period last year, according to Turkish Statistics Institute (TurkStat) data released on Monday.
As growth in the last quarter of 2017 was 7.3 percent, analysts were expecting growth of around 7 percent for the first quarter of 2018.
Gross domestic product (GDP) for the first three months also grew by 21.9 percent over last year’s Q1 and reached TL 792.7 billion (almost $207.5 billion).
The data also reveal an 11 point hike in household consumption, a 9.7 point increase in gross fixed capital formation and a 3.4 boost in government spending on goods and services, according to the BloombergHT.com website.
Among the sectors, agriculture’s added value in GDP increased 4.6 percent, while industry saw 8.8 percent and construction 6.9 percent hikes. The total added value of services, including transportation, trade, accommodation and food, expanded 10 percent.
Employee compensation had a 37.8 percent share in GDP, while it was 38.8 for Q1 of 2017.
First reactions to the data came from President Recep Tayyip Erdoğan and Economy Minister Nihat Zeybekci via Twitter.
“We are continuing to be one of the fastest growing economies in the world,” Erdoğan wrote.
“Despite all the economic attacks and plots, we are continuing with strong growth on concrete macroeconomic foundations!”
“We gave the necessary response to the international agencies that downgraded their forecasts for [the Turkish economy’s] growth. Soon they will start to upgrade their expectations,” Zeybekci wrote.
Cribstone Capital Management founder and emerging markets strategist Mike Harris said the growth was strong but unbalanced during an interview with Bloomberg Turkish TV service.
“If the growth was balanced, inflation wouldn’t be that much of a problem and the Turkish lira wouldn’t be under so much pressure. This is unbalanced growth,” he said.
Economists now expect narrow growth for the second quarter of the year, during which the Turkish lira has lost significant value against foreign currencies.
“The point is what the second quarter data will be. Preliminary indicators have shown that the economy will slow down in the second quarter,” Muammer Kömürcüoğlu, an economist at İş Investment, said in a client note, according to the Hürriyet Daily News.
He also added they had decreased their forecast for 2018 growth from 5.5 to 4 percent.
Turkey’s central bank also released the results of a poll on Monday indicating that the growth expectation for the end of 2018 was 4.2 percent.