Türkiye’s industrial production expanded more than expected in June, official data showed Friday, continuing a strong two-year run despite a background of surging inflation and foreign exchange volatility.
The output grew 8.5% year-over-year in June, the Turkish Statistical Institute (TurkStat) said, rising for a 24th consecutive month and exceeding average market forecasts of around 6.7%.
Output has made a strong recovery from the initial coronavirus wave in April of 2020.
The manufacturing index posted the best performance among industrial subsectors in June, jumping 10% from the same month last year.
The mining and quarrying index dropped 7.1%, while the electricity, gas, steam and air conditioning supply index increased 0.6% in June 2022, compared with the same month last year.
Month-over-month, industrial production expanded 1.3% on a calendar and seasonally adjusted basis, the statistical authority said.
The mining and quarrying index was down 2.1%, while the manufacturing gauge jumped 1.6% on monthly basis. The electricity, gas, steam and air conditioning supply index rose by 0.1%, the data showed.
Economists expect the pace of growth in the index to slow in the coming months. A potential drop in external demand or a supply chain disruption due to Russia’s invasion of Ukraine could also hit production.
In April of 2020, output dropped more than 30% in the face of the initial coronavirus wave. It has since made a strong recovery because subsequent measures largely skirted the manufacturing sector and most remaining restrictions were lifted in July of last year.
The median estimate in the Reuters poll of six institutions expected year-over-year growth of 6.7% in the calendar-adjusted industrial production index in June. Forecasts for the index, seen as a preliminary indicator of economic growth, ranged between 5.5% and 9.9%.
Albaraka Türk Economist Lütfullah Bingöl said the growth in the index could slow as of July, however, a possible improvement in chip shortages in the automotive sector could dampen the slowdown in other sectors during the rest of the year.
“We expect a slight slowdown in the growth of the industrial production index in July. However, if the chip issue in the automotive sector is resolved, it may balance the calm in other sectors for the rest of the year,” Bingöl told Reuters.
“For this reason and because of the very good course in tourism, we still expect year-end growth to be over 4%.”
Turkey's economy grew 11% last year, up sharply from a year earlier, but a sharp decline in the lira in December affected the company and household budgets and increased inflation via import prices.
The coronavirus pandemic, the late-2021 currency drop, and the resulting jump to 80% inflation, as well as the fallout from Russia’s invasion of Ukraine, are expected to hamper growth in 2022.
