Turkey: Industrial output growth accelerates in December
Industrial production grew 8.6% year-on-year on a calendar-adjusted basis in December, up from November’s revised 4.9% rise (previously reported: +5.1% year-on-year) rise and marking a near-two-year high and beating market expectations of a 7.0% increase. The print was buttressed by strong growth in manufacturing and mining output—with both growing at a near-two-year quick pace—while energy production rebounded from a contraction in the prior month. However, December’s data also benefited from a supportive base effect as December 2018 marked the bottom of the industrial sector’s downturn in the wake of 2018’s currency crisis. Annual average output contracted a softer 0.6% in December compared to November’s 1.5% drop.
Output also expanded at a stronger pace on a monthly basis, with production increasing 1.9% over the prior month in December, up from November’s revised 0.6% expansion (previously reported: +0.7% month-on-month)expansion. Sequential data for the quarter as a whole highlights the fragility of the economic recovery, however, as monthly output growth slowed notable compared to the third quarter.
This year, industrial output should recover on a supportive base effect and an improving macroeconomic environment. Yet the balance of risks remains tilted to the downside as the government continues its fiscal expansion in pursuit of high growth rates, which it could prioritize over bringing down inflation, and monetary policy space is limited with real interest rates in negative territory.