Industrial output in decline

Bloomberg

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Industrial output fell 20.9 percent from the same month last year, following a decline of a revised 23.8 percent in February that was the most since records began in 1986, the statistics office TurkStat said on its Web site Friday. Output was expected to decrease 22.8 percent, according to the median estimate of 10 economists surveyed by Bloomberg. The contraction supports Central Bank predictions that gross domestic product, which declined 6.2 percent in the last three months of 2008, shrank more than 10 percent in the first quarter of this year. That would be the worst quarterly performance since the current series of data began in 1999, exceeding even the country’s 2001 banking crisis.

The figures "support our call for a half-point cut by the central bank next week," Yarkın Cebeci, economist for JPMorgan Chase in Istanbul, wrote in an e-mail. The plunge in output comes "on the back of tighter credit conditions and weak domestic and international demand."

The Central Bank has cut its benchmark interest rate by 7 percentage points in the past six months, taking it to a record low of 9.75 percent as it seeks to cushion the effects of the global crisis. It next meets to decide rates on May 14.

Friday’s data showed the pace of decline slowed for the first time since output began to shrink in August last year. "The second quarter will be bad too, but perhaps not as bad," said Ozan Gazitürk, economist for Şekerbank in Istanbul.

Turkey is battling to offset the collapse in demand in the European Union, the main market for its industrial goods. Exports fell 28 percent in March from a year earlier and preliminary figures show a 34 percent drop in April.