Turkish economy grew 11 percent last year, driven by exports

Turkey's economy grew 11.0% in 2021 according to official data on Feb. 28, driven by a surge in domestic consumption and exports.

Monday February 28 2022 11:32 am

Duvar English - Reuters

Turkey's economy grew a powerful 11% in 2021 as expected, according to data on Feb. 28 showing it bounced back strongly from the COVID-19 pandemic, though economists expect a slowdown this year after an inflation surge.

In the fourth quarter gross domestic product (GDP) grew 9.1% year-on-year, just above forecast, expanding 1.5% from the previous quarter on a seasonally and calendar-adjusted basis, the Turkish Statistical Institute said.

President Recep Tayyip Erdoğan is implementing an economic plan that prioritizes growth, employment, investment and exports driven by a series of unorthodox interest rate cuts.

But his plan sparked a currency crisis and inflation of near 50% in January. It could also be derailed by Russia's invasion of Ukraine, which could slash tourism revenues seen vital to reducing a gaping current account deficit.

The full-year data showed expansion of 21.1% in service activities and 20.2% in information and communication. Agriculture shrank 2.2% and construction activity declined 0.9%.

In a Reuters poll, GDP was expected to have expanded 11% last year as a whole, with forecasts ranging between 6% and 11.8%. Fourth quarter growth was predicted to be 9%.

Turkey was one of the few countries to expand in 2020, due largely to cheap loans following a series of rate cuts to counter the pandemic's economic impact. Growth picked up pace again in 2021 as COVID-19 restrictions were largely lifted.

A currency crisis at the end of 2021, which resulted in the lira weakening 44% against the dollar over the year as a whole, has stunted growth expectations for 2022. Growth this year is expected to slow to 3.5%, according to the poll.