Domestic demand proved surprising support for economic growth in Turkey

Turkish economy grew more than expected in the first quarter of 2015 thanks to strong domestic demand.

Gross domestic product (GDP) expanded by 2.3% in January-March compared to 2.6% reported in the fourth quarter of 2014, according to latest data of the Turkish Statistics.

Household consumption, which accounts for about 2/3 of Turkey's GDP increased by 4.5% in 2.4% reported in the previous quarter.

Central Bank of Turkey suppressed consumption when in January last year increased interest rates. Then domestic demand rose only 1.3%.

The surprising stimulus that GDP obtained from strong demand  may distract expectations for a loosening of the monetary policy against the background of the unknowns after the parliamentary elections on 7 June, said the analyst in London Capital Group Ipek Yozkardeskaya.

"This is good news for the pound as better-than-expected data favor tightening of monetary policy," said the analyst. "The need for higher interest rates may increase in parallel with the political nervousness."

Following the publication of data the Turkish lira rose by 0.8% with traded to 2.7332 against the dollar.