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Turkey's GDP Probably Grew 6.6% in Fourth Quarter, Survey Shows |
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Written by Bloomberg
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Thursday, 30 March 2006 02:44 |
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Turkey's economy may have expanded for a 16th straight quarter in October-December, marking the longest period of uninterrupted growth since at least 1988, a survey of economists shows.
Gross domestic product probably grew an annual 6.6 percent, compared with 7 percent in the third quarter and 4.4 percent in the second, according to the median estimate of 12 economists surveyed by Bloomberg. The statistics office in Ankara is scheduled to release the report at 10 a.m. tomorrow.
Turkey's central bank has reduced interest rates 28 times since August 2001, prompting companies to invest in equipment and consumers to borrow to buy homes, cars and appliances. The economy will probably lose momentum in the current quarter as a rising lira crimps exports, economists said.
``Growth last year was very impressive, building on the superb performance over the past four years,'' said Mehmet Simsek, an economist at Merrill Lynch & Co. in London. Growth will ``moderate'' this year, he said.
Inflation slowed to 7.7 percent last year from a rate as high as 69 percent four years earlier as the government raised taxes and reduced spending to meet International Monetary Fund targets for the budget deficit. That enabled the central bank to lower the benchmark rate to a record 13.5 percent in December, from 83 percent in 2001.
Investment Growth
``Four years of consecutive growth in Turkey has boosted manufacturers' confidence in the future, prompting them to invest in goods such as industrial machinery,'' said Haluk Burumcekci, chief economist at Fortis Bank As in Istanbul.
Investment rose 18 percent in the first nine months of the year, the statistics office said on Dec. 12. Manufacturing expanded 7.4 percent in the three months through December, with production of machinery rising 7.8 percent, the office said March 14.
``Investment in machinery was noticeably stronger in the second half of the year,'' said Altug Karamenderes, chief economist at Ata Invest in Istanbul.
Foreign direct investment reached a record $9.65 billion last year, almost four times the 2004 figure, as companies bet Turkey's bid for membership of the European Union would boost profits. The nation began accession talks Oct. 3.
Lower interest rates increased demand for housing. Home loans by Turkish banks rose 38 percent in the fourth quarter to 12.4 billion liras ($9.2 billion), the central bank says.
Growth may slow this year after foreign investment pushed the lira up 14 percent against the euro from the start of 2005, crimping exports. The statistics office said exports fell 3.6 percent in January from a year earlier. Industrial production dropped 4.5 percent, the steepest decline in four years.
``Growth in the first three months will be very weak, weaker than the first quarter of 2005,'' Karamenderes said. The economy grew 4.8 percent in the first three months of last year.
The expansion may accelerate in the second quarter as the central bank resumes cutting interest rates, Burumcekci said.
``We'll probably see economic growth in Turkey moderating somewhat this year to around 5 percent, driven by private investment and consumption,'' Merrill Lynch's Simsek said. |