Turkey | Activity in q/q contraction as of April

Industrial Production (IP) surprised on the upside, increasing 13.3% yoy in calendar adjusted terms (vs our expectation of 10% and consensus of 7.5%). We expect GDP growth to be 2.5% in 2022.

Key points

• Key points:
• The monthly IP recovered in February on the back of capital and consumer goods, whereas intermediate and energy goods production remained much weaker.
• Although the recovery (4.4% m/m) compensated the contraction in January (-2.3%), IP continued to slow down in the first two months of the year (2% q/q) compared to 4Q21 (4% q/q growth).
• Despite the slight pick-up in manufacturing capacity utilization rate in March, other leading indicators (PMI and electricity consumption) confirm the deceleration in economic activity.
• The performance at the start of April implies a slight q/q contraction (our monthly GDP indicator shows a quarterly growth rate of 0.5-1% in 1Q), which might deepen if the spill-over effects from the war in Ukraine intensify.

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