Turkey’s industrial production exceeded forecasts by expanding 9.6% year-over-year in March, official data showed, rising for a 21st consecutive month as factory activity remains strong despite high inflation. Year-over-year growth has remained positive and sustained a solid trend in economic activity since the lifting of measures to combat the coronavirus pandemic in 2020.
On a monthly basis, the index shrank 2.4% in January due to electricity and natural gas cuts at industrial facilities stemming from a technical failure in Iran.
Month-on-month, industrial output shrank 1.8% in March on a calendar and seasonally adjusted basis, the Turkish Statistical Institute (TurkStat) said.
Economists expect the pace of growth in the index to slow in the coming months and approach a neutral level around summer. A potential drop in external demand or a supply chain disruption due to Russia’s invasion of Ukraine could also impact industrial production.
In April of 2020, output dropped more than 30% in the face of the initial coronavirus wave. It has since made a strong recovery because subsequent measures largely skirted the manufacturing sector and most remaining restrictions were lifted in July of last year. Turkey’s economy grew 11% last year, up sharply from a year earlier, but a sharp decline in the lira in December affected the company and household budgets and increased inflation via import prices. The coronavirus pandemic, the late-2021 currency drop, which has now been taken under control, and the resulting jump to almost 70% inflation, as well as the fallout from Russia’s invasion of Ukraine, are expected to hamper growth in 2022. The government and the central bank expect around 7% growth in the first quarter of 2022.