Expectations on growth still high

Data on May’s industrial production, announced on July 10, came in far below expectations. But it looks like the markets are not demoralized and are continuing to believe that growth figures will be high.

While the market was expecting a negative number, close to zero, the 1.5 percent drop in industrial production in May came as a surprise. In return, as of the month of May, the annualized growth in industrial production is announced as 3.5 percent.

It is estimated that industrial production in June could have been hurt again due to the effects of the Ramadan.

Nevertheless, markets are expecting an acceleration industrial production in the second quarter. While market experts accept that such a rise in production may soften by the end of the year, they believe that overall annual growth numbers for the year will be high above expectations. 

While they avoid clear-cut predictions, experts who expected the growth level to be around 3 percent previously are not set to raise annual national growth figures to 5 percent.

As far as we can see, they still want to come up with new estimates after they see a few more monthly realizations. We are seeing that almost all market actors are expecting a growth number over 4 percent.  
 
The recently announced data on industrial production is interpreted as the growth trend in production holding its strength for the second quarter too. As of June, annual growth is expected to come out as 5 percent, but some are noting that there could be a slight drop due to the Ramadan.       

It is being said that the increase in industrial growth, which has reached 5 percent in the April-May period, could rise above the level of the first quarter in the second quarter.

The strong trend in the export figures, the rise in the expectations for new orders, and the delayed effects of rapid credit growth, together with the fiscal expansion, are presented as signs that third quarter growth will be high. 

Link with growth weakened 

Industrial production growth is spreading to several sub-sectors. It is being noted that industrial production in the first quarter is mostly originating from automotive and electricity production. Leaving these two aside, core industrial production narrowed by 0.4 percent, yet the picture changed in May. Experts say the 3.8 percent growth in core industrial protection in the April-May period show that the recovery is spreading to other sectors. 

Analysts point toward the increasing contribution of intermediary goods production to the better balanced outlook in other sub-main products. They say the strong export figures and the production figures for domestic consumption show the same trend, adding that it is apparent that domestic income will grow with the contributions of both consumption and investment. 

Some market analyses, however, have highlighted the need to mention the regression in comparison to April. They suggest that the link between domestic income revision and industrial production has weakened. 

Still, they also underline that despite everything there has been a strong industrial production and this will boost growth higher.