UPDATE 2 - Turkish economy beats expectations, expands 7% in Q1

UPDATE WITH MORE FIGURES, COMMENTS FROM MINISTERS

By Aysu Bicer

ANKARA (AA) - Turkey's economy expanded 7% year-on-year in the first quarter of 2021 amid economic fallout from the coronavirus pandemic, according to the country's statistical authority on Monday.

This figure was well above market expectations as a panel of 16 economists surveyed by Anadolu Agency on Friday had estimated the Turkish economy would expand by 6.4% on average in the same period, in the January-March period, hovering between 5% and 7.2%.

Following the release of the growth data, the Turkish lira appreciated 0.73% at 8.48 versus the dollar. The lira started the new week at the level of 8.56 against the dollar.

Compared with currencies of developing countries, the Turkish lira gained the most value against the dollar on Monday, as the first quarter growth data came out better than expected.

The country's gross domestic product (GDP) at current prices increased 29.1% to 1.4 trillion Turkish liras ($188.6 billion) in the first quarter of the year, the Turkish Statistical Institute (TurkStat) said.

"Of the 7% growth in the first quarter, 56% came from net foreign demand and investments. This is an indicator of balanced and healthy growth," Turkish Finance Minister Lutfi Elvan said on Twitter.

"We will resolutely implement policies that create employment, improve income distribution and focus on stability," he underlined.

Also commenting on the latest growth data the Industry and Technology minister Mustafa Varank said the Turkish economy managed to grow by 7% in the first quarter of 2021 despite the ongoing pandemic.

"The manufacturing industry, which grew by 12.2%, was the sector that contributed the most to the increase in GDP. Our goal is to expand healthy by producing."​​​​​​​

Meanwhile, Alvaro Ortiz Vidal-Abarca, the chief economist for Turkey at Spanish-based BBVA bank said on Twitter: "Turkey's GDP grows at 7.0% in Q1 and stays near 23% in the second quarter."

"The data remind us that GDP will grow near or above 6% in 2021 and that controlling Inflation , not growth, should be the priority this year. Only by this will guarantee sustainable growth in 2022."

- Growth figures

Value added increased the most among financial and insurance activities constituting gross domestic product with 18.1% annually in the first quarter.

The figures rose 14.4% in other service activities, 11.7% in industry and 7.5% in agriculture during the same period.

Financial sector activity also rose by 2.9% followed by a 2.8% increase in construction sector and 2.4% in real estate activities.

Government final consumption expenditure grew 1.3%, while gross fixed capital formation jumped 11.4% in the January- March compared with the same quarter of the last year.

The final consumption expenditures of resident households gained by 7.4% in the same period, TurkStat said.

Exports of goods and services increased by 3.3%, imports diminished by 1.1%, it added.

Amid the pandemic, Turkey was one of the rare countries where negative growth did not occur and its economy grew by 1.8% in 2020.