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    Türkiye | Weak supply coupled with solid demand

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    Published on Monday, February 26, 2024 | Updated on Wednesday, April 17, 2024

    Türkiye | Weak supply coupled with solid demand

    Summary

    Our GDP nowcast indicators signal a continuing deterioration in economic activity with around stagnant quarterly GDP growth rate, which corresponds to an annual growth rate of 3.6% in 4Q23 and 3.5% as of January.

    Key points

    • Key points:
    • The imbalance between demand and supply continues due to weaker production and ongoing strong demand.
    • On the supply side, industrial activity adjusts more negatively, mainly led by poor export performance
    • We maintain our 2024 GDP growth forecast at 3.5%, which will follow a growth of nearly 4.5% in 2023

    • Our GDP nowcast indicators signal a continuing deterioration in economic activity with around stagnant quarterly GDP growth rate, which corresponds to an annual growth rate of 3.6% in 4Q23 and 3.5% as of January.

    • The imbalance between demand and supply continues due to weaker production and ongoing strong demand.

    • On the supply side, industrial activity adjusts more negatively, mainly led by poor export performance, while turnover indices in real terms indicate that activity in other sectors continued to deteriorate but much more slowly.

    xyz

    Figure 1. Garanti BBVA Monthly GDP Nowcast  (3-month average YoY)

    Figure 2. Garanti BBVA Monthly GDP Nowcast  (3-month average QoQ)

    Source: Garanti BBVA Research, *Garanti BBVA monthly GDP indicator is an average of different model results synthesizing high-frequency indicators to proxy monthly GDP (GBTRGDPY Index in BBG)

    Source: TURKSTAT, Garanti BBVA Research

    Figure 3. Economic Activity Indicators Heatmap (3-month YoY, mean corresponding to 2010-2022)

    Source: TURKSTAT, CBRT, Garanti BBVA Research
    *3MA Level

    • Our GDP nowcasts on demand sub-components indicate that private consumption (7.5pp) and investment (1.4pp) contributed totally 9pp to annual growth as of January, while the contribution of net exports (0.8pp) improved to the positive territory.

    • The current level of our financial conditions index signals somewhat an easing in overall conditions most recently (conditions are tight but it is still far from the level observed during 2018) which maintains upside risk on inflation outlook, given still solid domestic demand growing above the supply.

    • Compared to the delayed fiscal impulse coming from the gap between the Treasury cash and accrued Central Government budget deficit by the end of 2023 (at least 3% of GDP will be spent most likely in 1Q24), fiscal policy has already been loose, adding nearly 2.6pp fiscal impulse in the 4Q23 (1.9pp for the whole year). 

    • We maintain our 2024 GDP growth forecast at 3.5%, which will follow a growth of nearly 4.5% in 2023. 

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    Authors

    Gül Yücel BBVA Research - Senior Economist
    Borrar Borrar BBVA

    Documents and files

    Report (PDF)

    Turkiye-Activity-Pulse-Dec22-2.pdf

    English - February 26, 2024

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