Turkish economy seen growing at 8% in 2021 after huge Q2 growth

London: Turkish economy is expected to see a larger growth this year than expected as the country saw a massive jump in its GDP in Q2 even as inflation is strikingly hitting double digits. 

The government officially forecasts 5.8 percent growth this year, though the Treasury and Finance Minister Lutfi Elvan has said it could top 8 percent annually with a strong Q2 performance.

Turkey's economy grew a massive 21.7 percent 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 percent 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. August's inflation reading, due on Friday, is expected to stay close to July's 18.95 percent.

Elvan, commenting on the growth data, stressed the importance of tackling inflation.

"For sustainable and comprehensive growth, low inflation, exchange rate stability and predictability are of critical importance," Elvan said on Twitter.

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 percent, but the latest data was seen prompting some upward revision.

Growth in the second quarter was led by services, which bounced back 45.8 percent annually, followed by industry growth of 40.5 percent and information and communication sector expansion of 25.3 percent.

Separate data on Wednesday reinforced the picture of continuing expansion, with the Purchasing Managers' Index (PMI) for manufacturing rising to 54.1 in August from 54.0 a month earlier.