The Turkey ETF climbed Thursday after the Turkish government revealed strong economic growth, with Goldman Sachs projecting the strength to be maintained through the rest of the year.
On Thursday, the iShares MSCI Turkey ETF (NASDAQ: TUR) jumped 3.8%.
Turkish markets gained after Turkstat revealed gross domestic product increased 7.4% in 2017, with fourth quarter output up 7.3%, compared to median expectations of a 6.7% rise, Bloomberg reports.
“Pro-business and reform-oriented policies have been a key driver of economic growth in Turkey and the government is committed to continue these policies,” Arda Ermut, president of the official Investment Support and Promotion Agency of Turkey, said in a statement.
Turkey’s economy has been recouping after a slump that followed the failed military coup in July 2016 to become one of the fastest-expanding economies among G-20 nations.
Why Turkey Growth Will Continue
Aktif Yatirim Bankasi chief economist Ozlem Yetkin predicts Turkish growth will continue this year as households maintain spending on everything from appliances to food and health care.
“Households were the biggest contributor and going forward, consumption growth will remain solid in 2018” assuming no increase in financial volatility or the recent slump in the lira becoming prolonged, Yetkin told Bloomberg, projecting household spending to be near the government’s 5.5% growth target this year.
Turkish household consumption makes up about two-thirds of the economy and has traditionally driven growth. Consumption rose 6.6% in the fourth quarter year-over-year while public spending on purchases of goods and services gained 7.4% for the same period.
Related: Turkey ETF is Tempting for Near-Term Upside
Furthermore, Goldman Sachs also predicted Turkey’s economy will expand at a rate of 4% in 2018.
“Going forward, we expect the Turkish economy to grow at a rate of 4.0 percent in 2018, in line with consensus expectations. The government’s pro-growth bias creates upside risks to our views, whereas the deterioration in the inflation outlook and the current account deficit pose risks for slower growth,” Goldman Sachs said, according to AA.
For more information on the Turkish markets, visit our Turkey category.