Türkiye's economy rose 4% year-on-year in the first quarter of 2023, according to data released on Wednesday, beating the market forecast, yet the growth was reined in by the impact of February's earthquakes in the country's south.
Economists surveyed by Anadolu Agency (AA) had expected Türkiye's growth to be 3% on an annual basis in January-March.
The median estimate in a Reuters poll of 15 economists for Q1 Gross Domestic Product (GDP) growth was 3.9%, and forecasts ranged between 1.2% and 5.5%.
Treasury and Finance Minister Nureddin Nebati, commenting on the growth data on his social media account, acknowledged the challenging global financial conditions and weak global trade prevalent during this period. However, he highlighted Türkiye's unwavering commitment to investment, production and employment, even in the face of significant adversities such as the devastating earthquake and the difficult external environment.
He emphasized that the country continues to recover and compensate for the faced challenges.
Furthermore, Nebati emphasized on the importance of machinery and equipment investments in boosting potential production and fostering sustainable growth. He noted such investments experienced an 8% growth compared to the previous year's first quarter, marking their uninterrupted increase for the 14th consecutive quarter. Nebati stressed that high growth was not the sole achievement in the first quarter, highlighting the inclusive nature of the growth.
Nebati also pointed out positive developments in employment, reporting an increase of 1.6 million employed individuals in the first quarter compared to the previous year. He announced that the unemployment rate had fallen below double digits, reaching 9.9%.
Moreover, Nebati emphasized the government's efforts to support low-income and fixed-income groups, leading to a significant 6.8 percentage point increase in the share of labor payments in gross value added compared to the previous year's same period, reaching 38%.
The main reading followed a 3.5% annual growth in the final quarter of 2022.
Türkiye's economy bounced back strongly from the COVID-19 pandemic and grew 5.6% in 2022, extending its hot streak on strong domestic demand and exports, despite a slowdown in the main trading partners which hurt exports because of the Russia-Ukraine war in the second half of the year.
The country's central bank embarked on a 500-basis-point easing cycle last year to counter the slowdown in economic activity, driven by the new economic plan prioritizing growth, employment, investment, exports and low-interest rates.
In February, the central bank cut its policy rate by another 50 basis points to support recovery after earthquakes that killed over 50,000 people and caused severe damage across a large part of southern Türkiye.
"The first hard data about economic activity after the February earthquakes indicate, as expected, a weakening in former growth dynamics," Eurobank said in a recent note before the official data was released.
"That said, these figures should be interpreted cautiously, as the underlying surveys in the hit regions were based on alternative sources, providing partial field coverage."
Meanwhile, the GDP at current prices increased 84.4% to reach 4.63 trillion Turkish liras ($245.46 billion), Turkstat data showed.
On a quarterly basis, the Turkish economy grew 0.3% in the January-March period, slowing from 0.9% in October-December 2022.
Value added increased the most among the services – wholesale and retail trade, transport, storage, accommodation, and food service activities – constituting a GDP of 12.4% from a year ago in the first quarter.
The figures rose 5.1% in the construction sector, but decreased 0.7% in industry and 3.8% in agriculture, forestry, and fishing during the same period.
Government final consumption expenditure grew 5.3%, while gross fixed capital formation climbed 4.9% in the first quarter of 2022 compared with the same quarter of last year.
The final consumption expenditures of resident households gained 16.2% in the same period, TurkStat said.
2nd among OECD
Meanwhile, with the 4% growth recorded in the first quarter of the year, Türkiye managed to become the second highest-growing country among the Organization for Economic Cooperation and Development (OECD) countries and the third in the G-20.
Ireland emerged as the top performer among OECD countries, recording a growth rate of 6.4% in the first quarter of this year compared to the same period last year. Following closely behind were Türkiye, Israel, and Costa Rica, each with a growth rate of 4%. Spain also exhibited a solid performance with a growth rate of 3.8%.
The average growth rate for OECD countries' economies during the first quarter was estimated at 1.5%. Within the European Union (EU), economic growth stood at 1.2%, while the Euro Area recorded a growth rate of 1.3%.
Among the countries, the OECD announced whose data, Lithuania experienced the largest contraction, with a negative growth rate of -3.6%. Chile followed this with -0.7% and Germany with -0.5%, both facing modest declines in their economies.
Indonesia emerged as the front-runner among the G-20 countries, boasting the highest growth rate of 5% in the first quarter, as per the announced data. China closely followed with a growth rate of 4.5%, while Türkiye and Saudi Arabia secured notable positions with growth rates of 4% and 3.9% respectively.
Conversely, Russia's economy, grappling with the ongoing conflict with Ukraine since February of the previous year, contracted by 1.9% during this period.
When analyzing the growth rates of European Union (EU) countries, Ireland claimed the top spot.
Lithuania emerged as the EU country experiencing the most significant economic contraction, with a decline of 3.6%, among those countries whose data were disclosed.