Higher than expected Q2 growth, fueled by stock changes

TURKEY - In Brief 01 Sep 2025 by Murat Ucer

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According to data announced by Turkstat, second quarter GDP growth markedly exceeded expectations, including of this author, in both sequential and annual terms, coming in at 1.6%, q/q, and 4.8%, y/y, respectively (Graph 1). As usual we briefly focus on the sequential data here, which reflects the cyclical state of the economy much better, as we often point out, particularly in this quarter given last year’s weak base (see annex tables for the annual data for reference). Turkstat also announced comprehensive revisions to the NIA data, along the lines announced in February last year, the details of which were shared on the agency’s website (see Table 9 at link here). We share a few highlights for now, leaving a more detailed summary of the revisions for later. First off, as Graphs 2-3 show, which provide growth in expenditure components in absolute percentages and contributions, respectively, growth appears driven by stock changes (having made a very sizeable 3.7 pp contribution), which incidentally include, to recall, statistical error. Parenthetically, that this problem of lumping stock changes with statistical errors has not been resolved despite this comprehensive undertaking is disappointing, to say the least. The production side presents a healthier picture of sorts, with a relatively broad-based sectoral growth composition (Graph 4), but putting this together with the spending composition suggests that all this sectoral production, net/net, appears to have been channeled toward the building of inventories. Notwithstanding the strong headline figure, then, the underlying growth dynamics is arguably much weaker than this headline suggests. As for the revisions, we ...