Seasonally and calendar-adjusted real GDP increased by 0.7% quarter on quarter. The annual real GDP growth rate for 2014 was 2.9%-compared with an upwardly revised 4.2% in 2013.

Analysis

The recovering trend in economic activity in the fourth quarter of 2014 is unlikely to have continued into the first quarter of 2015. Turkey's external balances have improved, aided by lower global energy prices and a more competitive lira, but the prospect of US monetary policy tightening remains a source of financial volatility, keeping the lira under pressure and reducing the scope for further cuts in domestic interest rates.

The relatively low real GDP growth rate for 2014 was owing mainly to a slowdown in private consumption. Private consumption, which accounts for over 65% of GDP, rose by only 1.3%, compared with 5.1% in 2013, reflecting the introduction of consumer credit restrictions and a sharp increase in Central Bank of Turkey

interest rates in January to halt a slide in the external value of the lira. 

Slowing employment growth, high inflation and domestic political tensions also weighed on consumer confidence.

Monetary policy loosening in mid-year contributed to a partial improvement in the fourth quarter, when private consumption rose by 2.4% year on year (3.5% quarter on quarter, seasonally and calendar-adjusted).