Turkey economic growth slows more than expected to 2.5% in Q2 By Reuters

ISTANBUL (Reuters) -Turkey’s economy expanded by a less-than-expected 2.5% in the second quarter of the year, data showed on Monday, cooling in the face of a year-long monetary tightening drive.

Second-quarter gross domestic product (GDP) grew 0.1% from the previous quarter on a seasonally and calendar-adjusted basis, Turkish Statistical Institute (TUIK) data showed.

In a Reuters poll, the economy was forecast to have expanded 3.2% in the second quarter, with growth of 3.35% in 2024 as a whole.

There was growth of 6.5% in construction, 3.7% in real estate activities and agriculture, forestry and fishing, 3.4% in information and communication, with the value added increasing by 7.4% in other service activities, TUIK said.

Growth was revised down to 5.3% from 5.7% in the first quarter, when strong domestic demand was pushed up by a minimum wage hike and households bringing purchases forward in expectation of higher inflation ahead.

Last year’s annual growth was revised up to 5.1% from an initial 4.5%, despite a slowdown in main trading partners and a devastating earthquake in February.

Since June of last year, the central bank has hiked its key interest rate to 50% from 8.5% in order to cool inflation that touched 75% in May but dipped to below 62% in July and is expected to continue falling.