Aaj TV

By Nevzat Devranoglu and Daren Butler

ANKARA: Turkey's economy grew a massive 21.7% year-on-year in the second quarter, as expected, official data showed on Wednesday, rebounding powerfully after a sharp slowdown a year earlier driven by COVID-19 restrictions.

It expanded 0.9% compared to the previous quarter on a seasonally and calendar-adjusted basis, data from the Turkish Statistical Institute showed. The lira firmed as far as 8.29 after the figures from a close of 8.32.

However, the boom in economic activity is feeding into - and in turn being eroded by - double-digit inflation. On Friday, August's inflation reading is expected to stay close to the 18.95% logged in July.

The year-on-year economic growth figure was exactly in line with a Reuters poll for the second quarter. The poll also forecast full-year growth of 7.95%, but the latest data was seen prompting some upward revision.

"July-August leading indicators showed that economic activity sustained its momentum in the third quarter," said Burumcekci Consulting's Haluk Burumcekci, who raised the full-year growth forecast to 9.3% from 7.7%.

The $720-billion economy grew 1.8% last year, despite a 10.4% plunge in the second quarter, one of only a few globally to avoid annual contraction amid the initial pandemic fallout.

BUOYANT SERVICES

Growth in the second quarter was led by services, which bounced back 45.8% annually, followed by industry growth of 40.5% and information and communication sector expansion of 25.3%.

Slower growth was displayed by the real estate sector, which expanded 3.7%, construction at 3.1% and agriculture at 2.3%.

Turkey re-imposed curfews, weekend lockdowns and restaurant closures this year, including a tougher but brief lockdown in April and May due to surging COVID-19 cases. Manufacturing and the broader economy were largely unaffected by the measures, which were lifted in June.

The government officially forecasts 5.8% growth this year, though Finance Minister Lutfi Elvan said it could top 8% annually with a strong Q2 performance.

Turkey's economy, which has expanded 5% on average over the last two decades, has languished well below those levels for the last few years.