Turkey | Some negative signals from April IP

Summary

IP(cal. adj. ) contracted by 4% yoy in April, worse than market expectation (-2.5%). The deceleration in the yearly contraction still continues but loses some steam. Though, supported by the current momentum and positive base effects of 2H19, in absence of new shocks, we maintain our GDP growth forecast at 0.3% for 2019.

Key points

• Key points:
• IP declined by 1% mom in calendar and seasonal adjusted terms after its positive growth rates in the last 3 months, signalling some loss of pace in the recovery pattern.
• Our monthly GDP indicator shows further recovery in unadjusted terms for 2Q19 and nowcasts a contraction of 1.4% yoy in April (96% of info) and a growth rate of 0.5% yoy in May (47% of info). Favorable calendar day effects for both April and May (+2days in total) seem to provide a promising recovery, which will slightly be reversed in June when the long Bayram holiday has weighed (near -4days).
• Recently increased uncertainties could decelerate the recovery path as the high frequency indicators already started to give some mixed signals. Though, lagged effects of the likely credit impulses (two new credit packages) and the current momentum which will also be pushed by base effects from now onwards could still be the supporting factors.

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