ISTANBUL (Reuters) – Turkey’s economy grew 5.7% in the first quarter of the year, in line with expectations, official data showed on Friday, growing strongly as domestic demand boosted the economy.
In a Reuters poll, the economy was forecast to have expanded 5.7% in the first quarter. The poll predicted growth of 3.15% in 2024 as a whole.
Growth is expected to slow during the rest of the year as the central bank’s aggressive monetary tightening in the face of soaring inflation exerts an impact.
Turkey’s economy grew an annual 4.5% in 2023 and 4% in the first quarter of that year despite a slowdown in main trading partners and devastating earthquakes in February.
The central bank raised its policy rate by a total 4,150 basis points in a tightening cycle since last June, the latest one to 50% in March, citing deterioration in the inflation outlook. It has kept the benchmark rate steady since then and vowed to act if the inflation outlook worsens.
Economists have said the annual minimum wage hike and households bringing purchases forward in expectation of higher inflation in the future led to strong growth ahead of the local elections on March 31.
Even with tighter monetary conditions, first-quarter gross domestic product (GDP) grew 2.4% from the previous quarter on a seasonally and calendar-adjusted basis, data from the Turkish Statistical Institute showed.
In Q1 the total value added increased by 11.1% in construction and 5.5% in information and communication. Final consumption expenditure of resident households increased by 7.3%. Exports rose 4% and imports fell by 3.1% in the first quarter, the data showed.
