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Turkey Industry August 2019

Turkey: Industrial output falters in August

Industrial production in Turkey dropped 3.6% year-on-year in August, down from the revised 1.1% fall in July (previously reported: -1.2% year-on-year). The print was markedly below the market consensus of a much softer drop in output. August’s steeper decline in industrial output came on the back of a broad-based decline in output in the mining and quarrying; manufacturing; and electricity, gas and steam subsectors.

Meanwhile, industrial production swung from a 4.3% seasonally- and calendar-adjusted month-on-month expansion in July to a 2.8% contraction in August. This marked the second-steepest decline in output since July 2016; however, it is only the third monthly drop in the first eight months of the year.

Muhammet Mercan, chief economist at ING Turkey, stated that the monthly drop is likely to be a temporary blimp, despite moderating consumer and business confidence in September. This sentiment was reiterated by the research team at Credit Suisse, stating that “the preliminary indicators for economic activity in September suggest that industrial activity might have picked up again in September.” While the research team at BBVA also pointed to a likely pick-up in economic activity in September, it highlighted that downside risks to the positive outlook remain abound: “Complacency should be ruled out as uncertainties on geopolitical risks could dampen the upside risk.”

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