Turkey Economic Growth Q4 2007

Turkey's economic growth remained weak in the fourth quarter of 2007 and was unchanged at a five-year low of 3.4 percent due to weak consumer spending and a poor harvest the statistics office (Turkstat) said today, since third-quarter growth was also revised to 3.4 percent. Consumer spending has slowed steadily since the central bank raised interest rates in mid-2006 amid a financial crisis and in order to combat inflation. Low rainfall has also hit farm output.



Agricultural output fell 9.7 percent in the quarter, while construction expanded 0.5 percent, compared with growth of 4 percent the previous quarter and 18.5 percent in 2006, when the economy as a whole grew 6.9 percent. Industrial production increased at an average rate of 5.2 percent in the fourth quarter.

Gross domestic product in 2007 was $659 billion, the agency said. Growth for the year was 4.5 percent. The government's target was 5 percent.

A court case to outlaw the ruling Justice and Development Party which is rumbling around in the background may also lead to political instability, further damping the economic expansion.

Consumer confidence has also taken a hit, and the index of consumer confidence fell from a previous high of 96.2 to 93.9 during the fourth quarter and in February hit 87.6, the lowest since records began in 2003.



Private consumption increased an annual 2.9 percent in the quarter, slowing from 8.2 percent three months earlier.

The central bank cut its benchmark overnight borrowing rate by a total of 2.25 percentage points to 15.25 percent between September and February before halting its reductions this month. Any pick-up in domestic demand will be limited by the impact of the global credit squeeze, central bank Governor Durmus Yilmaz said on March 13.