Turkey’s economy grew a greater-than-expected 2.3 percent in the first quarter, data showed on Wednesday, in a speck of good news for the country as it faces the possibility of weeks of fractious talks on forming a coalition government.
President Tayyip Erdogan and members of the ruling AK Party had predicted for months the economy would get a boost after Sunday’s parliamentary elections, arguing that political certainty would help spur investment.
But the AKP failed to secure a majority in the election, putting an end to its more than a decade of single-party rule and plunging Turkey into political uncertainty not seen since the 1990s.
That is hardly good news for investors, who are already worried about stalling economic growth, high debt levels and a cratering lira currency. While better than expected, Wednesday’s GDP data would do little to improve the gloomy outlook, analysts said.
“This stronger outturn was caused by a sharp pick-up in consumer spending, which came at the cost of a lower domestic savings rate and a wider current account deficit,” said William Jackson, an emerging markets economist at Capital Economics.
“None of this looks sustainable and we think growth will be weak over the coming quarters,” he said in a note.
The 2.3 percent year-on-year growth outstripped the 1.6 percent forecast in a Reuters poll, triggering moderate gains in both stocks and the lira TRYTOM=D3, which has fallen more than 15 percent against the dollar this year.