Newsletters & Press

May 2021


Turkey recorded a first quarter of spectacular growth: + 7% compared to Q1 2020, exceeding all market expectations.

Household consumption, representing two thirds of the economy, continues to be one of the main engines of growth: it jumped 7.4% compared to the first quarter of the previous year. Exports grew by 3.3% year on year and public spending by 1.3%.

On a sectoral basis, the business sectors that have strongly contributed to growth are information & communication activities (+ 18.1%), other service activities (+ 14.4%), industry (+ 11.7%), agriculture (+ 7.5%), services (+ 5.9%), professional & administrative service activities (+ 5.3%) and public administration activities, education, human health and social services (+ 3.7%). Finance & insurance, construction as well as real estate activities also supported growth with an increase of 2.9%, 2.8% and 2.4% respectively.

Turkish industrial production performed well in March. According to the National Institute of Statistics (TUIK), it increased by 16.6% year-on-year, beating the forecast of 14.1%. On a monthly basis, it rose 0.7% against a forecast of 0.5% contraction. In March, the manufacturing industry index will have increased by 17.2% year on year.

Nevertheless, inflation continues to worry economists: it reached 17.14% in April 2021, year-on-year, after 16.19% in March. The central bank kept its main policy rate unchanged in May at 19% for the second month in a row, a move in line with market expectations. This rate should continue to be set at a level above that of inflation in order to maintain a deflationary effect until indicators point to a permanent fall in inflation. Some analysts believe that the central bank will lower its key rate to 14% by the end of the year.

In terms of the pandemic, Turkey has begun a phase of gradual normalization after strict containment applied between April 30 and May 16 covering the period of Ramadan synonymous with festivities and family visits. From now on, citizens can move freely between 5 a.m. and 9 p.m. during the week (including interurban travel), but a general curfew remains in effect on weekends. Catering places are expected to reopen face-to-face during the month of June with a tonnage limited to 50% of reception capacities. Vaccination, meanwhile, continues: more than 28 million doses have been administered and more than 12 million people have received two doses of the vaccine. On May 20, the Turkish Ministry of Health reached an agreement with Pfizer-BionTech to purchase 60 million doses with an option of 30 million additional doses.

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