The export climate for Turkish manufacturers remained robust in June, a survey showed Monday, but signs of an increasing slowdown in some of the key markets raised concerns about the sustainability of the strengthening external demand trend.
The Manufacturing Export Climate Index eased to 51.1 in June from 52.3 points in May, the Istanbul Chamber of Industry (ISO) said. Yet, the reading still signaled a continued improvement in export conditions as it remained above the threshold value of 50 separating growth from contraction for the fifth consecutive month.
The figure had risen to 51.7 points in February after dropping to 49.5 in January. It maintained pace to reach 52.6 points in March, before increasing to a one-year high of 53.1 in April.
The panel said the June reading indicated a moderate progression in demand conditions and the slowest pace of improvement in the last five months.
The data revealed that economic activity in Germany, the largest export market for Turkish manufacturers, remained unchanged in June, with a contraction in the manufacturing and construction sectors balancing out the growth in the services sector.
However, some European countries experienced a decline in production.
While output fell in Italy and France, growth slowed in the United Kingdom, Spain and Greece, the survey showed.
Similarly, growth has also lost momentum in the United States, reaching its lowest rate since March.
In contrast, the Middle East, especially the United Arab Emirates (UAE), Saudi Arabia and Qatar, continued to be the main source of demand growth for Turkish exporters. All of the BRIC countries, namely Brazil, Russia, India and China also remained in the expansion zone.
The UAE experienced the strongest economic activity growth in the last 10 months. Among the countries covered by the survey, the strongest expansion was recorded in Saudi Arabia, which grew at the fastest pace since March 2015.
Production also increased strongly in Qatar, while Lebanon achieved growth for the first time in more than a decade. Egypt was the only country where activity contracted among the economies of the region monitored within the scope of the survey.
Output growth in Russia came in strong and at the highest pace in the last three months, while economic activity in India also continued its rapid growth trend.
"While the export climate for Turkish manufacturers continued to improve in June, signs of an increasing slowdown in many export markets, particularly in Europe and North America, raise concerns about the sustainability of the strengthening external demand trend," said Andrew Harker, economics director at S&P Global Market Intelligence.
"On the other hand, the Middle East, the only region where no signs of a slowdown are observed, continues to be a significant source of demand amid a period of deceleration in other parts of the world," Harker added.