Data released by the statistical office Turkstat on Friday showed that Turkey Q2 GDP growth significantly disappointed with GDP increasing by only 0.3 percent q/q, missing expectations for 0.5 percent and compared to 0.7 percent in Q1.
On a year-over-year basis gross domestic product rose 3.1 percent in Q2, slower than the 4.7 percent rise in Q1. It was the weakest since the first quarter of 2015, when it grew 2.5 percent and widely missed economists expectation at 3.7 percent. The data show that the economy entered a soft patch even before the coup, which occurred in July. The failed coup is likely to have worsened the outlook further.
Details of the report showed private consumption which is the main pillar of growth decelerated noticeably, while the contribution of net-exports to growth was also negative. Fixed investment has anyway not been contributing to growth for several quarters now.
Household final consumption climbed 9.9 percent annually in the June quarter, while gross fixed capital formation contracted by 0.6 percent . Exports increased only 0.2 percent, while imports grew markedly by 7.7 percent in the second quarter as compared to last year.
"We have lowered our 2016 growth forecast from 3 percent to 2.3 percent and our 2017 forecast from 2.1 percent to 1.9 percent. Rating agencies are likely to view developments unfavourably. We see USD-TRY at 3.25 by year-end," said Commerzbank in a report.