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Türkiye’s Economic Growth Slows to 3.9% in Q3 as Foreign Demand Falls

A slow shutter speed exposure of people walking in the famous touristy Eminonu Square with Galata tower (R) in the background during the sunset in Istanbul, Türkiye, 28 November 2022. (EPA)
A slow shutter speed exposure of people walking in the famous touristy Eminonu Square with Galata tower (R) in the background during the sunset in Istanbul, Türkiye, 28 November 2022. (EPA)
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Türkiye’s Economic Growth Slows to 3.9% in Q3 as Foreign Demand Falls

A slow shutter speed exposure of people walking in the famous touristy Eminonu Square with Galata tower (R) in the background during the sunset in Istanbul, Türkiye, 28 November 2022. (EPA)
A slow shutter speed exposure of people walking in the famous touristy Eminonu Square with Galata tower (R) in the background during the sunset in Istanbul, Türkiye, 28 November 2022. (EPA)

Türkiye’s economy expanded 3.9% in the third quarter from a year ago, according to official data released on Wednesday, though growth slowed from the previous quarter as a global slowdown put a drag on exports, but the tourism sector remained strong.

Gross domestic product (GDP) contracted 0.1% from the previous quarter on a seasonally and calendar-adjusted basis, data from the Turkish Statistical Institute showed, marking the first contraction since the height of the COVID-19 pandemic in the second quarter of 2020.

Economists expect full-year growth of 5%, in line with forecasts, according to the latest Reuters poll, after a strong first half of the year.

Economists expect growth to slow further in Q4.

"It seems it is still possible to attain the 5% growth target if there is no quarterly contraction of more than 0.5% in Q4," Haluk Burumcekci, of Burumcekci Consulting, said.

The outlook for 2023 remains uncertain. A national election should take place no later than June, and an opposition victory could see a sharp reversal of President Tayyip Erdogan's economic policies.

Private consumption remained strong in the third quarter.

Analysts predicted growth would slow in the second half due to a downward trend in foreign demand, notably among Türkiye’s largest trade partners.

To counter the slowdown, Türkiye’s central bank embarked on an easing cycle between August and November, slashing its policy rate by 500 basis points to 9%.

Erdogan's economic program over the last 14 months prioritized growth and exports.

Central bank interest rate cuts that were sought by Erdogan last year led to a 44% depreciation in the lira and it has lost another 29% against the dollar this year, sending inflation to a 24-year high of more than 85% in October.

Last year, Türkiye’s economy bounced back strongly from the COVID-19 pandemic and grew 11.4%, its highest rate in a decade. Annual growth in the second quarter of 2022 was revised to 7.7% from 7.6%, data showed on Wednesday.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.