NET FOREIGN TRADE WEIGHED DOWN THE GROWTH
Ozan Bakış and Gökhan Dilek
In the last quarter of 2019, according to seasonal and calendar adjusted data, Gross Domestic Product (GDP) increased by 1.9 percent compared to the previous quarter, and grew by 6 percent compared to the same period of the previous year. Thus, GDP increased by 0.9 percent in 2019 compared to 2018 and exceeded the New Economy Program target (0.5 percent). In the fourth quarter of 2019, private consumption contributed 3.8 percentage points to year-on-year growth, while public spending provided very limited support with 0.4 percentage points. Investments partially suppressed growth and made negative 0.2 percentage points contribution. Net foreign trade pulled year-on-year growth down considerably: The contribution of exports was 1.4 percentage points, while the contribution of imports was minus 7.9 percentage points, and the contribution of net foreign trade summed to minus 6.5 percentage points.
According to the seasonally and calendar adjusted data, private consumption (1.8 percentage points) and change in inventories (2.7 percentage points) contributed significantly to quarter-on-quarter growth, while public expenditures, investments and exports also contributed positively. Imports weighed down growth with a negative contribution of minus 3.8 percentage points.
As in the previous note, we think that the positive contribution of change in inventories is caused by the high expectations of the firms which keep producing in a period of economic slowdown and sluggish consumer demand. On the other hand, investments recovered considerably, and imports have increased rapidly. In the fourth quarter of 2019, investments accelerated, as a result, its contribution to growth increased. When we evaluate all these signs together, we predict that economic growth will continue, at least in the short run.