Turkey industrial confidence positive for first time since COVID-19 outbreak

Industrial confidence in Turkey rose in July, registering a positive reading for the first time since the outbreak of the COVID-19 virus in mid-March.

Confidence among manufacturers increased to 100.7 points this month from 92.6 in June, the central bank said in a statement on Monday. The benchmark index last recorded a positive number in February of 106.9 points. Confidence stood at 98.3 points in July last year.

The Turkish government has flooded the economy with cheap loans from state-run banks and encouraged other lenders to follow suit as it attempted to reinvigorate an economic revival from a currency crisis in 2018, which was reversed in March. The central bank has backed those efforts by slashing interest rates to below the rate of inflation.

Almost 43 percent of manufacturers said they expected their production to increase over the next three months, the highest proportion since April 2015, while 46 percent expected it to remain unchanged, the central bank said.

Just over half of companies said their overall order books were normal for the season and 7.9 percent said they were above normal. More than 50 percent of manufacturers said their domestic and export orders were normal, while 10 percent and 4.5 percent of firms saw them as greater than normal, respectively.

Confidence in the retail, construction and services industries also rose in July, according to a survey published by the Turkish Statistical Institute on Monday. Confidence in retail climbed to 94.6 points from 86.4, construction to 87 points from 78 points and services to 66.7 points from 55.5. Any figure below 100 points indicates pessimism among respondents in the sectors.

Turkey’s economy plummeted into a recession following the currency crisis of 2018, which was partially caused by what analysts termed as "economic overheating".

Standard & Poor’s said on Friday that it expected the Turkish economy to recover in the second half of the year, but there were signs of past imbalance re-emerging, provoked by the surge in borrowing. S&P said it expected an annual economic contraction of 3.3 percent this year before a recovery in 2021 of 4.5 percent.