Turkey: Unexpected Signal from August IP

Industrial Production (IP) declined by 3.6% yoy in calendar adjusted terms in August, lower than median market expectation and ours (Consensus:-0.7%, BBVA: -0.5%). Our monthly GDP indicator nowcasts a growth rate of +1.5% yoy in September (47% of info). We maintained a prudent forecast of 0.3% growth for 2019.

Key points

• Key points:
• Industrial Production (IP) declined by 3.6% yoy in calendar adjusted terms in August, higher than expectation.
• The improvement in high frequency indicators signal some acceleration in economic activity.
• Strong base effects and the acceleration in credit growth on the ease in monetary policy put upside risk on economic activity, supporting our positive view for 4Q.
• Complacency should be ruled out as uncertainties on geopolitical risks could dampen the upside risk
• We maintained a prudent forecast of 0.3% GDP growth for 2019

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