Türkiye posts 7.6 percent economic growth in second quarter as labor share in GDP drops

Türkiye's economy grew 7.6 percent year-on-year in the second quarter of 2022, according to Turkish Statistical Institute (TurkStat) figures released today (August 31).

The country's gross domestic product (GDP) at current prices surged 114.6 percent to 3.4 trillion Turkish lira (219.3 billion US dollars) in the April-June period, said TurkStat.

During this period, while the annual sectoral growth was 7.8 percent in industry and 18.1 percent in services, construction decreased by 10.9 percent and agriculture by 2.9 percent.

With this growth rate, Türkiye became the second-fastest growing economy in the G20, after Saudi Arabia.

Household consumption

Final consumption expenditure of resident households increased by 22.5 percent, while the government's final consumption rose by 2.3 percent in the second quarter compared to the same period last year.

A reason for the increase in household consumption was the high inflation, according to economist Mustafa Sönmez.

"What is the fuss? 'I can't find it again at this price'," he wrote on Twitter. "The rush for automobiles, white goods, and electronics brought consumption, and that brought the growth."

Labor share

The TurkStat figures also showed that the labor share in the gross value added decreased from 31.2 percent from the first quarter of the year to 25.4 percent in the second quarter.

Graphic: TurkStat

Minister praises "economy model"

Commenting on the figures, the country's Finance Minister Nureddin Nebati said the economy had maintained balanced growth for five quarters.

Noting that the increase in machinery and equipment investments over the last two-and-a-half years continued with 17.8 percent in the second quarter, Nebati said it was a positive development in terms of increasing production capacity.

"In this period, an additional 900,000 people were employed compared to the end of last year, and the unemployment rate fell to 10.3 percent," he said, adding that these gains had been achieved thanks to the Turkish Economy Model, he said which prioritizes growth and employment and supports production and exports, which will continue in the rest of the year.

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Türkiye's economy had grown 7.3 percent year-on-year in the first quarter., according to TurkStat.

The Central Bank recently cut its interest rate by 100 basis points from 14 percent to 13 percent in an effort to shore up growth, while the country's annual inflation rate in July was at 79.6 percent according to TurkStat and 176 percent according to ENAG, an independent group of economists. (VK)