Turkey’s seasonally-adjusted industrial turnover index rose by 29.5% y/y in April after growing 26.3% y/y in March, the statistics institute TUIK said on June 13.
The index last went through an annual contraction in September last year - declining 1.2% - when the industrial production index also posted its last annual decline - measuring 2.9%. Both indices have been on an upward path since that month, despite a temporary reverse in February.
Turkey's growth in industrial output thus began its latest period of acceleration in March. Rising export demand in parallel with the depreciation of the Turkish lira, as well as government stimulation measures put in place before the April 16 referendum on bringing in an executive presidency, have been the main drivers behind the improved industrial production performance.
Turnover growth has been escalating at a higher pace than production, mainly due to rising inflation.
On a seasonally and calendar-adjusted basis, the industrial turnover index rose by 2.2% m/m in April, after rising by 1.2% m/m in March, TUIK data also showed on June 12.
Initial indicators point to the robust performance having continued through May.
The capacity utilisation rate (CUR) of the Turkish manufacturing sector rose to 78.8% in May, the highest figure recorded since August 2013.
Turkey's Manufacturing Purchasing Managers' Index (PMI) rose from 51.7 in April to 53.5 in May, the highest level recorded since December 2013 while calendar-adjusted industrial production growth hit a 20-month high in April and exports surged 16% y/y in May.
Turkey's calendar-adjusted retail sales volume index fell by 0.1% y/y in April after declining a revised 0.5% in March. However, the retail turnover index pointed to strong growth of 13.9% y/y in April, again mainly due to rising inflation.
Turkey’s annual inflation rate slightly declined to 11.72% in May after hitting 11.87% in April, the highest level recorded since October 2008. The May inflation figure met expectations for a retreat from April's peak point. However, annual inflation is still rather high and political pressure on the central bank to cut policy rates amid high inflationary pressures increased following the April referendum.
Production of the industrial sector, which rose 5% y/y in Q4, was up 5.3% y/y in Q1 while manufacturing output rose by 5.1% y/y after growing 4.4% y/y in Q4, according to the latest GDP data.
The strong loss in momentum that the Turkish economy experienced during 2016 is expected to reverse only gradually as uncertainty recedes during the year, the European Commission said last week. Supported firstly by net trade, momentum is set to improve towards the end of the year as domestic demand benefits from improvements in monetary conditions and confidence, according to the EC.
The OECD is forecasting that private final consumption growth in Turkey will decline to 3% in 2017 from 4.1% in 2016.