POSITIVE CONSUMPTION AND NEGATIVE INVESTMENTS CONTRIBUTIONS TO GROWTH RATE
Ozan Bakış and Uğurcan Acar
In the third quarter of 2019, according to seasonally and calendar day adjusted data, Gross Domestic Product (GDP) increased by 0.4 percent compared to the previous quarter, increased by 0.9 percent compared to the same quarter of last year. While private and government consumption contributed to the annual economic growth by 1 percentage point, the greatest negative impact on the annual economic growth comes from investments, for which the contribution to GDP growth was minus 3.6 percentage points. On the other hand, the contribution of net exports to growth is positive but limited: while the contribution of exports was 1.7 percentage points, imports’ contribution was minus 1.4 as imports start to increase.
Quarterly, we observe that private consumption, government expenditure, exports, and stock change contribute positively to the growth rate. The contribution of imports is minus 2.9 percentage points.
The fact that stock change contributes positively to growth when the Turkish economy goes down can be interpreted that despite low demand, production is still in progress; therefore, producer expectation of the future is positive. On the other hand, ongoing reductions in investments raise concerns for the next period of the GDP growth. Despite this positive sign, we observe that investments decline in year-on-year comparison while stays constant in quarter-on-quarter comparison. This would raise concern about future GDP growth but knowing that the quarter-on-quarter decline in investments was 6.8 percent in the second quarter we can speak of an improvement in investment trends as well. All in all, we anticipate that economic growth will continue at least in the short run.
doc. Growth2019Q3
pdf. Growth2019Q3