Holiday pulls down industry production

ANKARA/ISTANBUL

Sector representatives expect some increase in the November data for industrial production after long holidays.

Turkish industrial production fell a calendar- and seasonally-adjusted 3.1 percent in October compared to the previous month and rose 0.7 percent from the same month of the previous year, data from the Turkish Statistics Institute (TÜİK) showed yesterday.

Economy Minister Zafer Çağlayan said yesterday by way of written statement that the October data fell from the previous month due to the 9-day Eid-ul Adha religious holiday.

“We believe Turkey will reach a 4 percent of growth rate by the yearend in light of the existing data,” he said.

Long holidays affected the production rates in October, as they did partially in August and September, but sector representatives expect a dramatic increase in the November data.

“The growth rate in the last quarter is still positive, but we don’t give huge credit to this figure.

Tightening conditions are still threatening the economic activities,” Finansbank economist Deniz Çiçek told Reuters. “Despite this, the main indicators have been good for the last months. And we don’t expect any slowing down in the economic activity in the last quarter of the year,” Çiçek noted.

Dramatic decrease in consumer non-durables

TÜİK announces the GDP data for the third quarter today. Consumer non-durables shrank by 4.8 percent, in comparison with growth in manufacturing by-products by 1 percent, 2.5 percent in durables production and 1.6 percent in capital goods production.

“The shrinkage in some items, especially in consumer non-durables, should push us to question the growth rates in the first quarter of the next year,” Garanti Investments chief economist Gizem Öztok Altınsaç said to Reuters.

“We expect some negative moves in the exchange rates and interests will affect consumption rates, pushing down the growth rates in the first quarter of 2014,” Altınsaç noted.

Growth in Turkey is likely to accelerate this year following a sharp slowdown in 2012, according to the EBRD’s latest Regional Economic Prospects report, published last month.

The EBRD is forecasting slight moderate growth at 3.7 percent in 2013, after a mere 2.2 percent in 2012. It sees growth slipping back slightly to 3.6 per cent in 2014.

The report says recent capital outflows increased the risks facing the economy. The prospect of the U.S. tapering the Fed quantitative easing program led to a reversal of capital flows. However, markets stabilized following the Fed’s decision to delay tapering.