Turkey’s economic growth decelerated in the second quarter due to weak domestic demand, according to official data released on Monday.The Turkish Statistical Institute reported that the nation’s gross domestic product (GDP) grew by 2.5 percent year-on-year, following a 5.3 percent increase in the first quarter. This figure fell short of economists’ predictions, which anticipated a 3.2 percent growth rate.On a quarterly basis, Turkey’s economy expanded by a mere 0.1 percent. This sluggish growth mirrors the first quarter of 2023, when the economy experienced a downwardly revised 1.4 percent expansion.Examining expenditures, household consumption increased by 1.6 percent, and government spending rose by 0.7 percent. The growth in gross fixed capital formation was recorded at 0.5 percent.Exports of goods and services edged up by 0.04 percent, while imports of goods and services decreased by 5.7 percent.Capital Economics’ economist William Jackson observed that the data breakdown highlights that the rebalancing process remains inconsistent.This data suggests that the central bank may need to maintain high interest rates for an extended period, Jackson noted. The firm anticipates the first rate cut to occur in the first quarter of the following year.In its August meeting, the Central Bank of the Republic of Turkey maintained its key interest rates unchanged for the fifth consecutive session, holding steady at 50.00 percent.ING economist Muhammet Mercan indicated that tightening financial conditions, slowing real wage growth, and a potential rise in the unemployment rate suggest further economic slowdown ahead.Additionally, a Purchasing Managers’ Index (PMI) survey revealed that the Turkish manufacturing sector continued to contract midway through the third quarter. According to S&P Global, the headline PMI increased to 47.8 in August from 47.2 in July.New orders slowed for the fourteenth consecutive month in August, prompting companies to reduce their output, workforce, and purchasing activity. Despite this, input costs surged, leading manufacturers to raise their output prices at an accelerated rate, the survey reported.The material has been provided by InstaForex Company – www.instaforex.com
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