Turkish industrial production grows 7.9%

After strong expansion in the last two months of 2019, both seasonal and calendar-adjusted Turkish industrial production showed a slight correction in January by -0.2% MoM.

We think the contraction will not continue in February given the momentum in recent months, though the recovery process will likely remain challenging due to the volatile trajectory of production and Turkey’s macro performance sensitivity to eurozone activity.

Calendar-adjusted industrial production growth in January turned out to be slightly lower than expected at 7.9% YoY (vs 8.2% consensus), albeit still recording a healthy pace with large base effects.

Repairs and installation of machinery and equipment and manufacturing of other transport equipment (dominated by defence industry products) were major drags to monthly manufacturing production with -0.4bp and -0.3bp contributions. On the flip side, non-metallic mineral products (including cement production, which shows the extent of activity in construction) and basic metals lifted the headline by 0.3bp each.

Among broad economic categories, the performance of intermediate goods, sustaining growth in January, should be viewed positively given that they are highly correlated with economic activity, while nondurable consumer goods and energy were other groups raising the total production. However, capital goods production that has been on a fragile recovery path switched to negative territory and reduced industrial production by -1.1bp while nondurable consumer goods were also negative at -0.1bp.