Turkey: Industrial output growth decelerates in January
Industrial output grew 7.9% year-on-year in January on a calendar-adjusted basis, down from the revised 9.0% expansion recorded in December (previously reported: +8.6% year-on-year). The print reflected softer albeit still-strong growth in manufacturing and mining output, while energy generation growth accelerated markedly to an eight-month high. January’s figure also benefited from a supportive base effect as output fell markedly in the same month a year prior in the aftermath of the currency crisis. Annual average output, meanwhile, swung from a 0.6% contraction in December to a 0.7% expansion in January.
However, production fell 0.2% over the prior month in January, contrasting the strong 1.9% expansion in December. This suggests that the sector started the quarter on somewhat softer footing and highlights the fragility of the economic recovery in the country.
This year, industrial production is expected to bounce back on a supportive base effect and an improving macroeconomic environment. However, the balance of risks is tilted to the downside amid uncertainty over the inflation outlook as the government pursues high growth rates fueled by cheap credit, while geopolitical and global trade tensions remain. Moreover, the outbreak of the coronavirus is expected to weigh on the external sector and thereby drag on the industrial sector, too.