Turkey: Fourth quarter growth driven by strong private consumption

On the demand side, private consumption gained pace again with a 21.4% YoY rate. This was a major driver, contributing +12.5ppt to the headline GDP expansion in 4Q21. While growth in goods, and particularly non-durables, strengthened, services showed a significant acceleration and determined the outlook. This is indicative of more balanced consumption demand with the removal of pandemic control measures.

After a weak performance in the third quarter, investment contracted once again by 0.8% YoY in 4Q, subtracting -0.2ppt from the headline rate as companies became more cautious amid increasing uncertainty in the operating environment. In the breakdown, a continued rise in machinery and equipment investment is encouraging while construction investment remained in negative territory.

Elsewhere: i) public consumption cut 0.3ppt from the headline rate after strong contributions in the second and third quarters ii) inventory build-up shaved almost 7.0ppt off growth, likely reflecting some measurement problems iii) net exports raised the headline growth rate by +4.2ppt, the biggest contribution after household consumption. This is attributable to continuing strength in exports, up by 4.8% YoY, despite 0.6% YoY growth in imports.

In the sectoral breakdown, all sectors with the exception of construction have lifted the headline growth rate, showing a continuation of broad-based activity. Among positive drivers, services, once again, were the biggest contributor, pulling the last quarter’s performance up by 3.9ppt, followed by industry at 2.2% as indicated by industrial production data.

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