COVID-19 hits Turkey's industrial output harder than expected
Turkey’s industrial output fell an annual 2 percent in March, ending six straight months of expansion, as the COVID19 outbreak began to impact the economy.
Industrial production was expected to expand 1.8 percent in the month after rising 7.5 percent in February, according to a Reuters poll of eight institutions, who had all predicted growth.
Month-on-month, industrial output slumped 7.1 percent, exceeding contractions reported after a currency crisis in 2018, data published by the Turkish Statistical Institute on Thursday showed. Output of manufacturing companies dived 7.5 percent compared with February.
Many factories in Turkey have temporarily closed operations or slashed production since the government announced the first case of the coronavirus on March 11. President Recep Tayyip Erdogan has said the wheels of the economy must keep turning, but a sharp decline in demand for Turkish goods from abroad and from consumers means companies have been forced to cut output.
On an annual basis, production in mining and quarrying fell 5.6 percent. Manufacturing output dropped 1.9 percent.
The lower annual decline in production when compared with the month-on-month figure was helped by a similar drop in March 2019, when output fell 2.2 percent, and the expansion in activity later in the year.
The International Monetary Fund has forecast a contraction for Turkey’s economy of 5 percent this year. The European Bank for Reconstruction and Development (EBRD) said this week that economic output will probably shrink about 3.5 percent in 2020, but the prediction depended on how quickly social distancing measures were eased.
Erdogan’s government has announced an easing in lockdowns across the country, with many employees returning to work this week.
The statistics office said that the March industrial production data may be revised because it used value-added tax declarations as a measure. It said it was forced to use alternative calculation methods after the government extended a deadline for those declarations to be made.