Mar 15 2019

Turkey output growth signals bottoming-out economy, ING says

Growth in Turkey’s industrial production in January is another sign that the economy is bottoming out, ING Bank said in a report.

Turkish industrial output expanded by 1 percent on a monthly basis in January, the first increase in six months, the Turkish Statistical Institute said on Thursday.

“This can be viewed as a signal of gradual direction change after the August volatility that caused a significant adjustment in economic activity,” the Dutch bank said. “Manufacturing stood out as the major driver of the improvement.

“All the groups that recorded negative growth rates in December turned positive in January. Intermediate goods production was the major driver.”

The recovery, from a low base, comes in addition to a slowing credit adjustment, a slight improvement in business confidence, a loss in momentum in falls in white goods and motor vehicle sales, and improving PMI, ING said.

Turkey’s economy has contracted for two-straight quarters, meaning the country has entered a technical recession, following a currency crisis that peaked in August. Economic activity declined by 2.4 percent on a quarterly basis in the three months to December after a 1.6 percent decrease three months earlier, the Turkish Statistical Institute said on Monday.

The worst of Turkey’s economic downturn is over, Treasury and Finance Minister Berat Albayrak said on Monday, reacting to the latest economic growth figures.

Government measures, which include a higher-than-expected hike to the minimum wage, social security payment support for companies and packages to help small and medium-sized enterprises (SMEs) borrow at lower cost, can be helpful to economic recovery, ING said.