Turkey’s official gross domestic product (GDP) expanded by 2.5% y/y in 2Q24, the Turkish Statistical Institute (TUIK, or TurkStat), said on September 2.

TUIK also updated its 1Q24 figure to 5.3% y/y from the previously stated 5.7% y/y.

A 0.1% q/q official growth rate was also provided for 2Q24 while the 1Q24 figure was updated to 1.4% q/q from the previously stated 2.4% q/q.

It is not advisable to plan, price or draw inferences based on TUIK data. There is widespread concern about the reliability of Turkey’s official data series.

Macro data business

The GDP estimate, similar to almost all macro data, is a mission impossible. Indexing the whole value added that was produced (which is even impossible to measure before indexing it) is not a doable task.

The GDP figures, again similar to almost all macro data, are just “estimates” because of this.

Additionally, no government in the world, by nature of being a government, employs an honest approach in “estimating” its figures or in anything else.

Some of them are more professional, while some of them exaggerate, e.g. Turkey.

The mainstream (media, academics, etc) treat official data as secure figures in all cases, mainly due to ignorance (particularly when it comes to the media), and sometimes due to a role in manipulating the masses or simply to find a place in the game (if you question the existence of some particular gods, you cannot expect to be employed at some particular churches). For further info, see here.

Updating past data in new data releases, meanwhile, adds another pinch of comedy to the macro data business. When someone bothers themselves with remembering the line the mainstream pundits took on the previous release, they now see a saddle on a sow.

Simsek the Orthodox

In September 2023, in his medium-term economic programme (OVP), “orthodox” finance minister Mehmet Simsek pencilled in a 2024 official GDP release target of 4.0%.

In August 2023, bne IntelliNews noted: “If Simsek could declare 'I created a recession', that would be the best thing in terms of marketing Turkey to the global finance industry. But Turkey’s president, Recep Tayyip Erdogan, would then very likely administer a slap to his shiny pate.”

No technical recession

There is no difference between releasing 0.1% or releasing minus 0.1%. In any case, both figures are fake, yet both will be treated as the unchangeable words of a deity. 

However, Simsek has again failed to benefit from the delivery of a desired contraction due to the political constraint on him mentioned above.

On November 29, TUIK is to release its 3Q24 data. A revision to minus 0.1% q/q for 2Q24 and minus 0.x% for 3Q24 would do the job when it comes to presenting a technical recession (negative official GDP growth figures in two consecutive quarters on a q/q basis).

Rate cuts in 4Q

In this case, rather than launching the rate-cutting cycle with 250-bp cuts in October and/or November, a 500-bp cut could commence the cycle in December, based on the technical recession argument.

The move would exhibit some classiness by Turkey’s so-called orthodox economy management, who have so far turned to nothing beyond archaic IMF policies (which have been shelved even by the Fund over social explosion concerns in relation to the current situation of the world economy) along with talk of some “high-level” statistical models and boorishness.

The next monetary policy committee (MPC) meetings are scheduled for September 19, October 17, November 21 and December 26.

Full-year GDP release at around 4%

For the 2024 official growth release, Simsek is planning to find the middle ground between the finance industry and the boss, President Recep Tayyip Erdogan, at around 4%.

A technical recession could be delivered for the second and third quarters and 2024 annual growth could stand at just a little bit below 4%. However, as things stand, Simsek is not making a move to benefit from this scenario.

All is reliant on the mainstream’s “slowdown in growth over monetary tightening” circulations. That means failure as no fool, who would hand over their money to the Erdogan regime even after catching view of some headlines, can have been found since last year.

“Programme” misfiring

Simsek’s “programme” is  misfiring as things stand. It had a single goal, namely finding and delivering some FX.

(There is actually no programme. It is simply about offering an attractive return in USD terms to the finance industry. However, Simsek gets a little ugly in dealing with those who make some noise over there being no programme, or in suggesting, as they say, that the king has no clothes. If you don’t want to be scolded by Turkey’s economy boss, call it a “programme”).

In the period from the March 31 local elections to the end of May, Simsek quickly attracted around $20bn of carry trade inflows. In June and July, the inflows slowed. In August, they turned negative.

Fiscal ‘tightening’

Meanwhile, Simsek’s talk of fiscal tightening continues to do its job. However, in the absence of a technical recession, the finance industry may again question his budget dynamics.

Poor always cry

The poor are crying. They're wailing. The poor always cry and wail and it is the interior ministry’s job to attend to this, it is not the “orthodox” economy personnel’s problem.

Whenever a few people come together on the street, they are swept up by the police.

Hope is the poor man’s bread. They can eat it to their heart's content. Inflation will fall and some structural reforms are on the horizon.