Turkey’s hot economy stands in contrast with those of most neighbours in the European Union, in particular Greece, whose leader last week called on his citizens to emulate the success of his country’s old rival in bouncing back from economic adversity.
Concern as Turkish growth hits 11 per cent
Turkey has outpaced China with first-quarter annualized economic growth of 11 per cent, but its red-hot economy is proving more of a headache for policymakers than a cause of celebration.
The data, showing quarter-on-quarter growth of 1.4 per cent driven mainly by consumer spending, will fuel doubts over the central bank’s unorthodox attempts to cool the economy by limiting banks’ lending, rather than raising interest rates. Other data showed Turkey’s trade deficit had reached an all-time high of $10.1bn in May, confirming the scale of the challenge the central bank faces to curb domestic demand and control a swollen current account deficit that threatens financial stability.
“There is absolutely no sign that the economy is slowing,” said Timothy Ash, economist at Royal Bank of Scotland, voicing the fears of many foreign investors who have become more cautious about what they view as an unsustainable boom.