ISTANBUL: Turkiye’s economy expanded by a more-than-expected 5.9 percent in the third quarter, driven by household spending, data showed on Thursday, but activity should slow through the year-end after aggressive monetary tightening to cool demand, according to Reuters.
Gross domestic product grew 0.3 percent from the previous quarter on a seasonally and calendar-adjusted basis, data from the Turkish Statistical Institute showed.
In a Reuters poll, the economy was forecast to have expanded 5.6 percent annually in the third quarter, after which it should cool given the central bank has hiked rates to 40 percent from 8.5 percent since June as part of a sharp U-turn toward policy orthodoxy.
The annual reading was the highest since the second quarter of last year. Growth in the second quarter of this year was revised up to 3.9 percent from 3.8 percent, the data also showed.
The construction and industrial sectors expanded by 8.1 percent and 5.7 percent respectively, while the agriculture sector grew by only 0.3 percent, the data showed, in part reflecting fallout and rebuilding after this year’s devastating earthquakes in the southeast.
The lira strengthened to 28.85 against the dollar after the data was revealed, boosting expectations of a further 250 basis points rate hike by the central bank in December.
Nevertheless, analysts predicted Turkiye’s economy would begin to slow after aggressive monetary tightening designed to cool demand and inflation.
“With the central bank set to keep interest rates at a restrictive level over the coming quarters, growth looks set to slow further in 2024 and this will help to narrow the current account deficit and cool inflation pressures,” said Liam Peach, senior emerging markets economist at Capital Economics.