Turkey economy growth “more than questionable” says Commerzbank

Turkey’s official growth figures are “more than questionable” and may have been “politically influenced”, Germany’s second-largest bank has said, according to Financial Times (FT), after figures released earlier this week suggested the country has bounced back from last year’s political instability to become one of the fastest-growing economies in the world.

Official data released Monday showed the Turkish economy expanded by 2.1 per cent in the second quarter. The figures followed similarly positive data showing economic confidence in the country is at a five-year high.

However, in a report titled “Turkey – Are you kidding me?”, Commerzbank’s emerging markets strategist Lutz Karpowitz cast doubt over the scale of the rebound.

One area of concern for the bank, in which the German government holds a large stake, is in tourism. Turkey’s economy contracted sharply last year as a series of terror attacks and an attempted coup drove away tourists and foreign investors.

However, official data show the tourist industry has bounced back this year, helped by a weaker lira and improved relations with Russia. But Karpowitz was sceptical that increased arrivals from Russia and the Middle East could make up for falling numbers from western Europe, particularly Germany.

Germans typically accounted for 15 per cent of Turkey’s tourism arrivals in recent years, but rising tensions between the two nations have discouraged travel this year.

Germany’s foreign minister in July warned that Turkey is unsafe for visitors, and Commerzbank estimates that fewer than 1.5m Germans will travel to Turkey in 2017, down from 3.9m in 2016.

The Turkish Statistical Institute’s latest figures also showed a strong rebound in fixed investment, which increased 6 per cent between April and June.

Commerzbank, however, suggested that political unrest in Turkey is “poison for investment decisions”, and said, “verifiable international data is pointing in a different direction”.

Foreign direct investment in the first half of the year fell 8 per cent year on year, according to IMF data, meaning “anyone believing in the official investment boom in Turkey is suggesting that Turkish investors operate along completely different lines than their international colleagues”.

Commerzbank said it “would be very pleased for Turkey if the economic miracle really was happening”, but said the official data “simply does not sit very comfortably with the current situation”.

A Turkish government official said it “is simply not possible” that TurkStat’s figures had been politically influenced. TurkStat could not be immediately reached for comment.