Bloomberg News

Turkey Economy Expands More Than Expected as Deficit Widens

June 11, 2013

Turkey’s gross domestic product expanded more than expected in the first quarter while the current-account deficit rose in April, according to data released today.

The economy grew 3 percent, compared with a median estimate of 2.3 percent in a Bloomberg survey of 11 economists. The current-account deficit widened to $8.17 billion in April from $4.55 billion a year earlier, in line with the median estimate of $8.1 billion in a Bloomberg survey.

The reports come as Turkish police move to retake an Istanbul square today that had been occupied by anti-government protesters, and as the central bank introduced extraordinary measures to tighten liquidity in response to currency volatility. The bank said it may start direct interventions in the currency market today to protect the lira, which had weakened 1.4 percent in the month to yesterday’s close, the most among 10 currencies in Eastern Europe and the Middle East.

Turkey may have difficulty reaching its year-end goal of 4 percent growth, Economy Minister Zafer Caglayan said at a press conference in Ankara today. The economy needs to grow by 5.5 percent to 6 percent a year, he said. He blamed a recent rise in benchmark bond yields and a fall in the stock market on financial speculators making up a so-called “interest rates lobby” that he says is seeking to keep Turkey’s borrowing costs high.

The lira strengthened 0.4 percent to 1.8937 per dollar at 11:43 a.m. on the back of the central bank’s statement. Stocks rose 0.9 percent and benchmark two-year bond yields increased 12 basis points to 6.62 percent.

To contact the reporter on this story: Benjamin Harvey in Istanbul at bharvey11@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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