Turkish economy grows 7.4% in election boost for Erdoğan

Turkey’s economy grew an annual 7.4 percent in the first quarter of the year, led by an expansion in the services industry, the state statistics office said.

Services grew by 10 percent, manufacturing by 8.8 percent and construction by 6.9 percent, the office in Ankara said on Monday. Agriculture expanded 4.6 percent. A Bloomberg survey of economists had predicted overall growth of 7 percent.

The Turkish economic data, although well-flagged, will be good news for President Recep Tayyip Erdogan as he campaigns for re-election on June 24. The expansion matched economic growth for 2017 and beat an annual increase of 7.3 percent in the fourth quarter.

Household final consumption expenditure rose by 11 percent. Exports of goods and services edged up 0.5 percent from a year earlier while imports jumped 15.6 percent, the data showed.

Turkey’s lira has dropped more than 15 percent against the dollar this year on concern that government stimulus measures are leading to overheating, as indicated by the country’s widening, import-fueled current account deficit, which totals about 6 percent of GDP. The central bank has raised interest rates by 425 basis points to 17.75 percent over the past month to defend the currency and help re-balance the economy.

Growth increased by 2 percent compared with the fourth quarter of last year, the office said. That was the fastest rate of expansion in a year.