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Turkey Industry November 2019

Turkey: Industrial output growth picks up pace in November

Industrial production grew a calendar-adjusted 5.1% year-on-year in November, up from October’s revised 3.9% expansion (previously reported: +3.8% year-on-year). The print marked the strongest growth in output in 16 months; however, the figure came in notably below market expectations of a 6.2% increase. November’s print was buttressed by a surge in mining and quarrying output and strong manufacturing production growth. In fact, mining and quarrying output grew at a near two-year high. On the other hand, November’s print also benefited from a supportive base effect as industrial output fell at a marked pace in the same month a year prior.

Sequential data also improved as industrial output returned to growth on a monthly basis in November; output expanded 0.7% month-on-month and swung from a 0.9% contraction in the prior month. Yet the monthly data highlights the fragility of the Turkish recovery: Industrial production is expected to have lost momentum in the fourth quarter compared to the third. Nonetheless, annual average output fell a softer 2.1% in November compared to October’s 3.1% contraction.

Looking ahead, industrial production is expected to recover this year partly owing to a supportive base effect and to an improving macroeconomic environment. However, the balance of risks remains tilted to the downside, particularly as the government continues its fiscal expansion—potentially prioritizing economic growth over bringing down inflation—and monetary policy space is limited after a strong easing cycle last year.

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