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Turkish economy grows 4.4%, beating analysts' outlook

Turkey’s GPD sees growth despite market turmoil and austere monetary policy

Published: Updated:

The Turkish economy grew by a stronger-than-expected 4.4 percent in the third quarter of 2013, official data showed on Tuesday.

The figure, which compares with the same quarter of 2012, was higher than the market consensus of around 4.0 percent.

Growth for the first nine months of the year was 4.0 percent which the government said was "in line with its growth predictions for 2013."

The government is forecasting growth of just 3.6 percent for this year and 4.0 percent for 2014, down from a peak of 8.9 percent in 2010.

Turkey along with other emerging economies has been buffeted by market turmoil in anticipation of a withdrawal of US monetary stimulus, which saw the local currency take a tumble in the summer, and effective official interest rates rise sharply.

William Jackson, emerging markets economist at Capital Economics in London, said that growth of Turkish gross domestic product had held up "relatively well" in the third quarter in spite of the turmoil in the financial markets and a substantial tightening of monetary policy.

But he said this was made possible by a rapid expansion of credit and coincided with a renewed widening of the current account deficit, which makes the economy vulnerable to external risks.

"Looking further ahead, given the country's external vulnerabilities and the risks stemming from the recent credit boom, we think growth is likely to be more volatile and weaker than most expect over the next year or so," Jackson said.

Gokce Celik, an economist at Finansbank in Istanbul, also suggested that costlier external finance would "pose the main downside risk on next year's growth outlook," predicting 3.7 percent growth for next year.

But the government dismissed the concerns, with Finance Minister Mehmet Simsek talking of "balanced and moderate" growth in 2013.

Simsek told the parliament that the Turkish economy "performed well given the global conjecture and a tightening in financial conditions", adding that the latest figures showed the government would easily achieve its growth forecasts."