Turkey | Still solid activity in 4Q20

Industrial Production (IP) grew by 11% yoy in cal. adj. terms in November, confirming a growth level in the first 2 months of 4Q20 (9%) similar to the strong 3Q20 performance (8.5%). We expect GDP growth to materialize near 5% in 2021, benefiting from a sizable contribution from external demand.

Key points

• Key points:
• Seasonal and calendar adjusted IP was supported by all main subsectors except for non-durable goods. The main contributors were the capital goods (3.6% mom) and intermediate goods production (1.2% mom), indicating a positive outlook for near term growth.
• On the sectoral side, IP continued to be supported by mainly manufacturing sector (1.4% mom).
• Our monthly GDP indicator nowcasts a yearly GDP growth rate of near 6% as of December for 4Q20 (37% information), which will imply a full year growth rate of 1.5-2% in 2020.
• We maintain our 2021 GDP forecast at 5% on the back of earlier than expected inoculation in main economies, favorable base effects, ongoing stabilization in financial assets, supportive capital inflows to emerging markets and expected recovery in global economy although the pending effects of the recent and most probably prolonged financial tightening are expected to weigh down on economic activity.

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