Industrial output expected to plummet

Bloomberg

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Turkish industrial output probably tumbled the most in seven years in November as demand for cars slumped in Europe and local automakers responded by halting production.

Output may decrease an annual 14.1 percent, according to the median estimate of eight economists surveyed by Bloomberg News, following a decline of 8.5 percent in October. The state-run statistics office in Ankara will announce the figures at 10 a.m. Thursday.

The contraction would be the biggest since November 2001, when the country was in its worst recession since World War II. Turkey is seeking International Monetary Fund support as economic growth slows and the global credit crisis cuts the flow of foreign investment in emerging markets.

Sharp contraction
"It’s hard to overstate the importance of such a major contraction in output," said İnan Demir, an economist at Finansbank in Istanbul. "It confirms that GDP will contract sharply in the final quarter of 2008."

Gross domestic product expanded 0.5 percent in the third quarter of the year, its slowest pace in six years, after growing 2.3 percent in the second three months.

Exports fell 17.5 percent in November from a year earlier to $9.3 billion, the lowest in more than a year, the statistics office said on Dec. 30. Exports of cars and other vehicles slid 45 percent to $939 million.

Passenger car sales slumped an annual 57 percent in November, the fifth consecutive decline. Waning sales abroad and at home prompted producers including Toyota Motor Corp., Tofaş, which makes Fiat cars, and Ford’s Turkish unit to suspend production in November.

Motor vehicle production in the month halved from a year earlier to 59,000 units, the Automotive Manufacturers’ Association said on Dec. 22.

Declining demand gave the Central Bank room to reduce its benchmark interest rate 1.25 percentage points to 15 percent in December, following a half-point cut the month before. The inflation slowed to 10.1 percent in December from 10.8 percent a month earlier, the statistics agency said on Jan. 2.

The benchmark stock index gained 1.9 percent last week to 27,005.6. The lira weakened to 1.5380 to the dollar from 1.51. The yield on the benchmark lira bond tracked by ABN Amro fell to 16.12 percent from 16.65 percent.