Turkey’s industrial output jumped 16.6% year-on-year in March, official data showed Tuesday, far exceeding forecasts and expanding for an 11th consecutive month after slowing sharply last year due to initial measures to curb the coronavirus pandemic.
Month-on-month industrial output rose 0.7% in March on a calendar and seasonally adjusted basis, said the Turkish Statistical Institute (TurkStat).
In a Reuters poll, the year-on-year growth in output was forecast at 12.5%. An Anadolu Agency (AA) survey expected production to rise 13.8% annually.
The index has been posting monthly increases since May 2020 and rising annually since June 2020, according to TurkStat.
On a monthly basis and by sub-sectors, the mining and quarrying index was down by 1.7%, while the manufacturing and electricity-gas-steam-air-conditioning supply indices increased by 0.3% and 7.3%, respectively, in March.
Annually, all sub-sectors posted increases: electricity-gas-steam-air-conditioning supply by 11.9%, mining and quarrying by 14.8% and manufacturing by 17.2%.
In February, the adjusted industrial output indices on a monthly and annual basis were up 0.2% and 8.9%, respectively.
Citing the March data, Industry and Technology Minister Mustafa Varank said industry proved it is the locomotive of the Turkish economy by protecting its rising trend for the past 11 months in a row.
He also said that industrial production expanded by 12.3% in the first quarter of 2021 versus the same quarter last year.
With these results, Turkey became one of the countries with the highest increase in industrial production among the G-20 countries, the minister added.
Many Turkish factories halted operations a year ago, soon after the first COVID-19 infection was recorded. Output dropped 31.4% in April and 19.9% in May before recovery began in June.
The second-half rebound in activity helped the economy expand 1.8% in 2020, one of only a few countries to avoid a contraction, thanks to a state lender-led credit boom mid-year.
Economists expect growth to return to near 5% this year, although much could depend on how the early-season rise in coronavirus cases affects the key tourism season.
In the first quarter of 2021, industrial production grew 12.3% year-on-year, the data also showed.
The March reading signaled further strong gross domestic product (GDP) growth in the first quarter, said Dutch banking and financial giant ING in an emailed note.
“This was despite renewed second wave pandemic control measures, along with continuing policy tightening in recent months,” it noted.
Turkey imposed curfews, weekend lockdowns and restaurant closures in December, but manufacturing and the broader economy was unaffected.
A surge in COVID-19 cases in March 2021 prompted Ankara to revive curbs on people’s movement and some business activities, but manufacturing has been exempted from the lockdowns and closures.
“Industrial production seems to be quite strong as it came above the general market expectation,” said Enver Erkan, the chief economist at Istanbul-based Tera Yatırım, but noted it was normal to see two-digit annual increases in this period of the year due to the base effect.
“In order to follow the trend, it will be more rational to evaluate monthly data, where we can observe periodic accelerations and slowdowns from here,” Erkan said in an emailed note. “The abnormal conditions of the last year resulted in a low base effect; in this context, we will see very strong double-digit increases in industrial production, especially in April and May. (Second quarter 2021) growth will also occur in double digits due to the base effect.”
Yet, he warned there are factors that pose downside risks in terms of industrial activity and general economic growth throughout the year.
“Although there was a closing effect as of April and May, the extent of this was not felt as it was in the previous year in terms of industry, both because of the immunity to the conditions and the production was not stopped. There was no effect in the current March data, as there was not much closure at that time, and this is evident from the rate of increase in the monthly data. The situation in monthly data seems important in terms of showing periodic developments within the year,” Erkan noted.
“The trend here must be sustainable in order for the improvement to continue and to strengthen the economic growth. With the double-digit growth to be realized in (the second quarter), 2021 growth will probably be realized above 5% with the help of the base effect from the low growth of the previous year,” he added.
