Turkey | Negative surprise in July industrial production

Summary

Industrial Production (IP) grew remarkably lower than expectations by 8.7% yoy in calendar adjusted terms (cons:15.2%) in July, whereas it contracted by 2.3% yoy in raw series. However given the strong momentum so far and still recovering global growth we maintain our 2021 GDP growth forecast at 9%.

Key points

• Key points:
• Seasonal and calendar adjusted IP contracted by 4.2%mom in July (strongest contraction in 15months, prev: +2.2%mom).
• The deceleration was broad-based, led by all main subsectors (durable & non-durable goods: -7.2% & -1.2%, capital: -11.6% and intermediate: -3.5%) except for energy goods production(+2.7% mom).
• Most of the sectors subtracted from the overall growth, where other transport equipment, rubber & plastic, motor vehicles, electrical equipment and textile production were the pioneers in negative contribution.
• The contraction in production might be a signal of stock depletion as our Big Data demand proxies remains robust.
• We expect 2021 GDP growth to be 9%, with risks still on the upside; though today’s data might partially eliminate those risks, which will be clearer with August data.

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