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Turkey: Growth slowing even before corona

All the below data combined, it seems Turkey's growth story remains intact though a notch weaker at the start of 1Q20 compared with 4Q19. Even before the coronavirus scare and its toll on the global economy unveiling; Turkey's growth was set to lose momentum. The base year effect will mute y-o-y growth figures while the excessive rate cuts will start backfiring as the Turkish lira was to weaken. Now, that the COVID-19 is tearing apart the financial markets, freezing the normal functioning of the global economy and stunning the financial markets, the sharp slowdown expected on a global scare is no reach Turkey, inevitably.

Turkey: Growth slowing even before corona

Turkey’s macro data unveiled today shows that the growth momentum that was evident from 6% GDP growth of 4Q19 has been mildly easing since the turn of the year.

All the below data combined, it seems Turkey’s growth story remains intact though a notch weaker at the start of 1Q20 compared with 4Q19. Even before the coronavirus scare and its toll on the global economy unveiling; Turkey’s growth was set to lose momentum. The base year effect will mute y-o-y growth figures while the excessive rate cuts will start backfiring as the Turkish lira was to weaken. Now, that the COVID-19 is tearing apart the financial markets, freezing the normal functioning of the global economy and stunning the financial markets, the sharp slowdown expected on a global scare is no reach Turkey, inevitably. Thus, what will start as growth to a tune of 5-6% for 1Q20 will soon and sharply slowdown in the upcoming quarters. Perhaps to turn to negative by the last quarter of 2020. Thus, while revisions to growth are probably in the cards, Turkey’s GDP growth should be expected at around 3% for 2020 as the downside seems very probable.

That is, as of January 2020, Turkey’s industrial production increased by 7.9% annually, and decreased by 0.2% monthly.

The subsectors of the industry mining and quarrying index increased by 8.5%, manufacturing index increased by 8.2% and electricity, gas, steam and air conditioning supply index increased by 3.8% in January 2020, compared with same month of previous year.

On monthly terms, while mining and quarrying index decreased by 2.1%, and manufacturing index decreased by 0.3%, electricity, gas, steam and air conditioning supply index increased by 3.2% in January 2020.

On a same note, Turkey’s retail sales volume increased by 9.6% on annual basis; and dropped by 0.8% in monthly terms.

In January food, drinks and tobacco sales increased by 5.5%, non-food (except automotive fuel) sales increased by 13.6%, automotive fuel sales increased by 5.8%; all year-on-year.

On monthly terms, in the same month food, drinks and tobacco sales decreased by 0.1%, non-food (except automotive fuel) sales decreased by 1.8%, automotive fuel sales increased by 1.0%.

Then again, retail turnover increased by 20.6% on annual basis; and increased by a muted 0.2% on monthly terms.

As of January year-on-year, food, drinks and tobacco sales increased by 17.7%, non-food (except automotive fuel) sales increased by 23.2%, automotive fuel sales increased by 18.9%.

In monthly terms, food, drinks and tobacco sales increased by 0.8%, automotive fuel sales increased by 2.3%, non-food (except automotive fuel) sales decreased by 1.0%.

Finally, total turnover index including industry, construction, trade, and services sectors increased by 20.5% on annual basis; increased by 0.8% on monthly basis in January 2020.

The details show that on annual basis industry increased by 20.1%, trade increased by 27.0%, services increased by 20.8%, while construction decreased by 17.9% on annual basis in January 2020. On monthly terms, industry increased by 3.5%, trade increased by 0.7%, while construction decreased by 8.7%. Services remained same on monthly basis in January 2020.

 

 

 

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