Turkey: Industrial production increases above expectations in January

According to calendar adjusted data, Turkey’s industrial production in January increased by 11.4% compared to the same month of the previous year; Seasonal and calendar adjusted industrial production, on the other hand, increased by 1% compared to the previous month. According to the unregulated data, there was an increase of 7.5% in industrial production compared to the same period of the previous year. Our estimation was that industrial production increased by 8.9% on an annual basis and 0.3% on a monthly basis in December.

According to calendar adjusted data, Turkey’s industrial production in January increased by 11.4% compared to the same month of the previous year; Seasonal and calendar adjusted industrial production, on the other hand, increased by 1% compared to the previous month. According to the unregulated data, there was an increase of 7.5% in industrial production compared to the same period of the previous year. Our estimation was that industrial production increased by 8.9% on an annual basis and 0.3% on a monthly basis in December.

Industrial production data point to an annual increase of 11.4%, which is 8.9% above our expectation. Although the rate of increase in items such as intermediate goods and durable consumer goods was quite strong, it was an expected situation in terms of the manufacturing PMI, which increased to 54.4 in January, when the industry entered the year rapidly. The appearance of the loose credit conditions coming from 3Q20 to 4Q20 and the openness of the production channels during the closing periods were effective in keeping the industry on the strong side in the sectoral context.

When we look at the details; Mining and quarrying increased 6.8% on a monthly basis, while it increased by 15.4% on an annual basis. While the manufacturing industry has increased by 1.1% on a monthly basis, there has been a growth of 12.1% on an annual basis. In the electricity, gas and steam group, a 1.6% contraction was observed on a monthly basis, while the contraction was at the level of 0.1% on an annual basis. On a monthly basis, durable consumer goods increased by 6.5%, intermediate goods by 3.3% and non-durable consumer goods by 0.4%. Capital goods contracted by 2.9% and energy by 1.2%. Considering the annual changes in the related items; Durable consumer goods increased by 20.5%, intermediate goods by 16.9%, capital goods by 11.1%, non-durable consumer goods by 6.3% and energy by 0.3%.

1Q21 is foreseen as the slowest quarter of the year due to epidemic conditions, however, the growth outlook may be realized better with the support of the manufacturing sector, depending on the relatively strong course of economic activity. Factors such as the opening effect on economic activity, the increasing contribution of the tourism season in the summer, the possible increase in net exports with the improvement in foreign demand and the base effect make a growth of around 5% in 2021 the base scenario.

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