Turkey's Industrial Production Growth Slows in November 2014

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Researched by Industrial Info Resources (Sugar Land, Texas)--Turkey's industrial production figures rose less than expected in November, which signaled a slowing pace in economic growth in the fourth quarter of the year.

According to figures by the Turkish Statistical Institute (Turkstat), Turkey's statistics agency, production rose 0.7% from November 2013, compared with a 2.4% increase in September from a year before. On monthly basis, industrial production each fell 0.1% in November. Market participants expected 2.4% rise in calendar-adjusted industrial production.

The industrial production growth was supported by a pick-up in utilities output and strong growth in mining. According to sectoral figures, mining output jumped 6.3% from the same month in 2013, while manufacturing output decreased 0.2%--its worst performance since January 2012--and electricity output and distribution both rose 5%.

The figures painted a grim outlook for the overall economy, analysts said. "The weakness of industrial production growth in October and November suggests that GDP growth could be even weaker in the fourth quarter than it was in the third quarter, which expanded 1.7% year on year," said William Jackson, a senior economist at Capital Economics (London, England). "Moreover, if industrial output remained flat in December, it would have fallen by 1% over the quarter as a whole, which suggests that GDP may have contracted in quarterly terms in the fourth quarter."

"Despite the acceleration in the loan growth, the deterioration of consumer confidence suggests that the recovery in domestic demand is fragile," said Deniz Cicek, an economist at Finansbank, based in Istanbul. "We don't observe a notable sequential improvement in the growth outlook for the fourth quarter. As base effects will not be supportive, there may be a further contraction in the year on year growth rate in the fourth quarter. In this situation, there's a downside risk in our annual growth rate forecast of 3% in 2014."

Turkey's Industrial Minister Fikri Celik said the slowing pace of industrial growth that was seen in November is temporary: "Turkey's neighboring countries and slowing economic environment in the European Union resulted [in] a decrease in the industrial production. The export figures signaled early warnings of this slowing in industrial production, we had already expected this contraction.

"The early indicators are showing an increase in demand in the domestic market."

Turkish government officials are expecting 3% GDP growth in 2013, and 4% annual growth rate in 2015. Earlier this week, Turkey's economic czar, Deputy Prime Minister Ali Babacan, said that even 3% annual growth rate will be better than all European countries.

The EU is on the verge of a deflation due to slowing demand and a slump in inflation rates, which was caused by the free-fall in oil prices. The price of Western Texas Intermediate crude oil has fallen 50% since early June.

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