Turkey manufacturing activity slumps in ‘bitter blow’ to companies
Turkey’s manufacturing activity slumped in March, wiping out gains made since last July, as the impact of the coronavirus swept through the economy.
Turkish industrialists had reported the fastest improvement in business conditions in two years in February, reflecting a strong recovery from a currency crisis in the summer of 2018.
But figures for March showed the headline Istanbul Chamber of Industry Turkey Manufacturing PMI index slumping to 48.1 points last month, from 52.4 in February. Any reading below 50 points indicates a contraction in activity.
“The COVID-19 pandemic comes at a time when the Turkish manufacturing sector was building good growth momentum, and is therefore a bitter blow for firms,” said Andrew Harker, economics director at IHS Markit, which helps prepare the monthly survey. “Output and new orders slowed sharply, with the global nature of the outbreak hitting exports and supply chains hard.”
Turkish President Recep Tayyip Erdoğan said on Monday that the wheels of the economy must keep turning after calls by opposition politicians and some analysts for tighter lockdowns and social distancing measures. The country’s central bank announced further monetary easing measures on Tuesday and the government is implementing a 100 billion-lira ($15-billion) package of financial measures to help keep the economy on its feet.
The impact on the delivery of purchased products has been heavy, with suppliers’ delivery times lengthening to the second-greatest extent since the survey began in June 2005, IHS Markit and the Istanbul Chamber of Industry said.
Input cost inflation was also marked due to the weakness of the lira and supply shortages, leading manufacturers to raise their own prices. The rate of price inflation was the steepest in almost a year and a half, according to the survey’s findings.
Turkish business groups are calling on Erdoğan’s government to make more cash available to help struggling firms and employees. But Turkey’s financial options are limited. The government spent billions of dollars to help stimulate economic recovery during 2019 after a currency crisis erupted the year before.
The lira fell by 0.5 percent to 6.64 per dollar on Wednesday, pegging the lowest levels since September 2018, a month after the crisis struck.