Headline GDP is impressive, but the details are much less so

TURKEY - In Brief 31 Mar 2016 by Murat Ucer

---

Turkish GDP expanded by an impressive – and higher-than-expected -- 5.7%, y/y, in the final quarter of the year, resulting in 4% growth for the year as a whole (2014: 3%). The figure no doubt makes an impressive headline, but the details suggest some caution. First, in seasonally- and working day adjusted terms, economy appears to have slowed to an annualized rate of 3% in Q4. Second, growth in 2015 as a whole is driven almost entirely by private consumption and government spending while private investment and net exports -- two two components that should normally be driving growth -- make little contribution as a whole. Third, private consumption does not look particularly broad-based. Finally, the observed CAD adjustment in 2015, based on our estimates for the investment and saving ratios, appears driven by lower investment than higher savings. This print, despite the relatively high carry-over growth from 2015, does not change my below-consensus growth expectation for this year -- like 2.5%-3% vs. over 3.5% consensus. I will follow this up with a Market Brief later today...