Turkish economic growth rebounds strongly in 2016 with consumption drive, data shows

Turkey's economy grew a faster-than-expected 3.5 percent in the fourth quarter of 2016, mainly due to a significant rise in consumption, data showed on March 31, bouncing back after last July's coup attempt and underpinning hopes of a recovery less than three weeks ahead of a referendum. 

The strong growth in the last three months of 2016 followed the first quarterly economic contraction in seven years in the third quarter, when the economy shrank a revised 1.3 percent in the immediate aftermath of the failed putsch. 

Growth in 2016 as a whole was 2.9 percent, according to data from the Turkish Statistical Institute (TÜİK), above the 2.2 percent forecast in a Reuters poll. 

The fourth quarter growth had been expected to be just 2.3 percent. 

A rise in automotive sales in the last quarter ahead of a then-planned tax hike and the acceleration in construction investment made a positive impact over the economic growth, according to analysts. 

"In the first half of 2017, this positive trend will likely continue thanks to a value-added tax (VAT) cut in home appliances and a loan package for Turkish businesses under the ceiling of the Credit Guarantee Fund [KGF]," said Vakıfbank in a note, as quoted by Reuters. 

Household final consumption expenditure increased 5.7 percent in the fourth quarter of 2016 compared with the same quarter of the previous year, TÜİK data showed.

The government final consumption expenditure also saw a 0.8 percent increase. 

"Whether this trend continues in the second half will however be closely followed," it added. 

"I guess in the end this data shows [the] continued durability of the Turkish economy," Timothy Ash of BlueBay Asset Management said on Twitter.