Turkey: Despite the partial slowdown in I/P, the monthly and annual growth trend continues

According to calendar adjusted data, Turkey’s industrial production in February increased by 8.8% compared to the same month of the previous year; Seasonal and calendar adjusted industrial production, on the other hand, increased by 0.1% compared to the previous month.

According to calendar adjusted data, Turkey’s industrial production in February increased by 8.8% compared to the same month of the previous year; Seasonal and calendar adjusted industrial production, on the other hand, increased by 0.1% compared to the previous month. According to the unadjusted data, there was an increase of 5.7% in industrial production compared to the same period of the previous year. Our estimation was that industrial production increased by 9.3% on an annual basis and 0.7% on a monthly basis in February with adjusted data.

 

Industrial production increased by 1% in January compared to the previous month. The monthly increase of 0.1% in February, adjusted for seasonal and calendar effects, indicates a slowdown effect. The decline in manufacturing PMI data from 54.4 to 51.7 in February also reveals a picture that matches this slowdown effect. In March, on the other hand, the activity observed in production within the framework of certain sectors caused the PMI value to increase to 52.6 again. Although the data may indicate periodic slowdowns, all of them are in the growth zone in terms of base values.

 

When we look at the details; While mining and quarrying contracted by 2.3% on a monthly basis, it increased by 15.9% on an annual basis. While the manufacturing industry has increased by 0.2% on a monthly basis, it has grown by 9.3% on an annual basis. In the electricity, gas and steam group, an increase of 0.8% was observed on a monthly basis, while the contraction was realized at the level of 0.8% on an annual basis. Capital goods increased by 3.3% on a monthly basis. Durable and non-durable consumer goods decreased by 1%, energy by 0.4% and intermediate goods by 0.3%. Considering the annual changes in the related items; Durable consumer goods increased by 19.5%, intermediate goods by 13.7%, capital goods by 5.9%, non-durable consumer goods by 5.1% and energy by 1.7%.

 

Even though industrial production shows a fluctuating pattern in January and February, the growth trend continues. Leading indicators such as retail sales, turnover indices and manufacturing PMI are strong. The leading data announced by the Ministry of Trade also show the effect from the increase in exports in the first quarter more positively. In this context, there is an increase to 19 billion USD in March. All these factors support the overall economic growth outlook and add weight to predictions of good growth in 1Q21.

 

Another factor that will affect the growth outlook will of course be the impact of the policies to be implemented by the Central Bank on macro balances. The communication policy of the Central Bank does not yet indicate an interest rate cut. In inflation, the worst has not been left behind and the rise may continue for a while. Increase in currencies and commodity prices raises input costs; rising costs both create inflation and slow down production. Inflation path and risk cost necessitate monetary policy to remain tight and to be in a position to make additional tightening if necessary. An increase in exchange rates due to a possible policy easing or an expectation of this will return to us as additional inflation pressure. In all these conditions; We do not expect the Central Bank to change interest rates this week.

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