Turkey’s April working day adjusted industrial production, contracted by 31.4% compared to the same month of the previous year. Seasonally and working day adjusted industrial production decreased by 30.4% compared to the previous month. According to unadjusted data, industrial production contracted by 31.3% compared to the same period of the previous year.
It was difficult to predict the slowdown in production, which showed a sudden stop with the effect of a pandemic. Indeed, the standard deviation was quite high in the estimations. However, basically there is actually no unexpected situation, a sharp contraction was expected. We could feel the contraction effect from the middle of March, as a result of the fact that the March data showed the sudden stop effect in industrial production. In April data, where the worst effects are seen, together with the effect of Covid-19, we see the reflection of the negativity in foreign trade markets in addition to demand and domestic consumption channels.
When we look at the details; While mining and quarrying contracted by 13% on a monthly basis, it decreased by 14.5% on an annual basis. While the manufacturing industry contracted by 32.5% on a monthly basis, there was a 33.3% contraction on an annual basis. In the electricity, gas and steam group, a 12.4% contraction was observed on a monthly basis, while the contraction was 14.9% on an annual basis. On a monthly basis, durable consumption goods decreased by 41.7%, capital goods by 40.2%, intermediate goods by 30%, non-durable consumption goods by 28.3% and energy by 13.5%. Looking at the annual changes in the related items; durable consumer goods 49.3%, capital goods 42.9%, non-durable goods 31.5%, intermediate goods 27.9% and energy contracted 15.6%. In particular, the decrease in the manufacturing industry, consumer durables and capital goods is remarkable.
The start of normalization with June and the opening of our export markets, especially in Europe, may provide gradual recovery in the coming periods. However, May data will continue to reflect abnormal conditions in terms of industrial production as it is within the lockdown period. As being the most important leading indicator we use to estimate the course of economic growth, industrial production shows that the contraction in 2Q20 will be quite severe. What will happen in terms of growth in the following quarters of the year will depend entirely on the trend associated with Covid-19 and the continuity of normalization. The data coming from the USA increases the concerns of the second wave, and even if it is not the second wave, the effects of Covid conditions and vulnerability can be seen in the new period, as the capacity utilization, production rate and demand will be below the pre-virus period.
Source: Tera Menkul
Hibya News Agency