Women shop at a local market in Istanbul, Turkey January 12, 2021. Picture taken January 12, 2021. REUTERS/Murad Sezer
ANKARA, Sept 1 (Reuters) - Turkey's economy grew a massive 21.7% year-on-year in the second quarter, as expected, official data showed on Wednesday, rebounding powerfully after a sharp slowdown a year earlier driven by COVID-19 restrictions.
It expanded 0.9% compared to the previous quarter on a seasonally and calendar-adjusted basis, data from the Turkish Statistical Institute showed. The lira firmed as far as 8.29 after the figures from a close of 8.32.
However, the boom in economic activity is feeding into - and in turn being eroded by - double-digit inflation. On Friday, August's inflation reading is expected to stay close to the 18.95% logged in July. read more
The year-on-year economic growth figure was exactly in line with a Reuters poll for the second quarter. The poll also forecast full-year growth of 7.95%, but the latest data was seen prompting some upward revision.
"July-August leading indicators showed that economic activity sustained its momentum in the third quarter," said Burumcekci Consulting's Haluk Burumcekci, who raised the full-year growth forecast to 9.3% from 7.7%.
The $720-billion economy grew 1.8% last year, despite a 10.4% plunge in the second quarter, one of only a few globally to avoid annual contraction amid the initial pandemic fallout.
BUOYANT SERVICES
Growth in the second quarter was led by services, which bounced back 45.8% annually, followed by industry growth of 40.5% and information and communication sector expansion of 25.3%.
Slower growth was displayed by the real estate sector, which expanded 3.7%, construction at 3.1% and agriculture at 2.3%.
Turkey re-imposed curfews, weekend lockdowns and restaurant closures this year, including a tougher but brief lockdown in April and May due to surging COVID-19 cases. Manufacturing and the broader economy were largely unaffected by the measures, which were lifted in June.
The government officially forecasts 5.8% growth this year, though Finance Minister Lutfi Elvan said it could top 8% annually with a strong Q2 performance.
Turkey's economy, which has expanded 5% on average over the last two decades, has languished well below those levels for the last few years.
Reporting by Nevzat Devranoglu in Ankara and Daren Butler and Ezgi Erkoyun in Istanbul; Editing by Jonathan Spicer, Dominic Evans and Gareth Jones
Our Standards: The Thomson Reuters Trust Principles.
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