Turkey’s Q3 GDP growth less than expected; 2003 target will be met

ANKARA – Turkey’s economy expanded below expectations in the third quarter, data showed yesterday, but analysts said Ankara can still beat growth targets for 2003 under a $16 billion pact with the International Monetary Fund (IMF). Growth was less than predicted because the industrial sector had expanded just 8.1 percent in the quarter, well below levels indicated by previously released data, the analysts said. Gross national product (GNP) in Turkey, bouncing back from a financial crisis that peaked some three years ago, grew an annual 4.9 percent in the third quarter of the year, short of the 6.4 percent predicted in a Reuters poll. «The surprise mainly came because industrial output was lower than indicated by the monthly industrial index figures and the construction sector was much weaker than expected,» said Yarkin Cebeci at JP Morgan in Istanbul. The industrial output index jumped 11.8 percent in July, 11.1 percent in August and 13.3 percent in September, official data showed. Growth in the construction sector was a negative 16.9 percent for the quarter. The data helped spark selling on Turkey’s financial markets. The main stock index fell 1.04 percent in the first session and the lira weakened to 1,434,000 to the dollar, off previous highs above 1,430,000. Gross domestic product (GDP) grew 4.8 percent year-on-year in the third quarter, below predictions of 6.6 percent. IMF-backed structural reforms are helping to pave the way for sustainable economic growth in the EU candidate country. GNP growth for the first nine months of 2003 stood at 5.2 percent, the statistics office said, above an IMF-backed target of 5.0 percent for the end of the year. The ruling Justice and Development Party (AK) hopes robust industrial output, helped by a jump in exports, will also bolster GNP next year. «Although the data fell below expectations it wasn’t that bad… I think the 5 percent target for the end of the year will be beaten comfortably,» said Demet Atam at Global Securities. GNP is expected to rise 5.6 percent and GDP 5.7 percent in 2003, according to a Reuters poll published on Monday. Turkey also targets 5 percent GNP growth in 2004 under its IMF pact. Analysts said the third-quarter data may raise hopes for a central bank cut in interest rates. «One positive thing is that the weaker-than-expected growth raises the likelihood of a rate cut by the central bank. There’s no overheating in the economy, that’s for sure,» Cebeci said.