Turkey’s industrial output surprises in July, signaling higher Q3 growth

ANKARA – Hürriyet Daily News

DAILY NEWS photo

Turkey’s industrial production has started the third quarter strongly, official data has shown, giving a glimpse of hope for better economic growth in a country that is facing increasing economic problems.

According to Turkish Statistical Institute (TÜİK) data, Turkey’s calendar-adjusted industrial production index soared by 4,6 percent in July compared to the same period last year and by 0.9 percent compared to the previous month.

The index came above market expectations and predictions, which were around 3.45 percent for the yearly rise.

“If this data, which looks better than expected, persists in August and September as well, we will see slightly better third-quarter growth,” Turkish Economy Minister Zafer Çağlayan said, albeit keeping his year-end growth forecast at slightly above 3 percent.

Turkey has been forced to lower its sights for its year-end targets due to several political and economic developments that emerged in recent months.

The Fed’s expected decision to taper its stimulus program, the lack of sufficient fund influxes into Turkey, the possibility of intervention in Syria and the risk of it spreading into the region, developments in Egypt, a rise in oil prices and general global economic problems pose significant risks to Turkey’s growth, according to analysts.

The latest data, in addition to soaring trade and current account deficits, support that concern as well.

The government has forecast growth of 4 percent this year and 5 percent next year, according to its medium-term economic program, but ministers have already talked down the outlook for 2013, saying the economy is instead likely to expand by 3 to 4 percent.

Although July data might be insufficient to prevent the Turkish economy from growing at less than expected as Çağlayan indicated, the impressive industrial manufacturing data might be a consolation.

Garanti Yatırım Chief Economist Gizem Öztok Altınsaç said the data would have a positive impact on growth, but because it is not a key indicator, the effect will be limited.

“The recovery in capital and intermediate goods’ manufacturing are very obvious. It’s positive for investments. It’s compatible with our 4 percent growth expectation for 2013. But the recovery in investments shouldn’t be deceptive,” she said.

Meanwhile, the subsectors of industry mining and quarrying decreased 2.3 percent, manufacturing increased 6.2 percent, while the electricity, gas, steam and air conditioning supply index decreased 1.6 percent in July 2013, compared with the same month last year.