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ANALYSIS: Turkish Industrial Production Starts the Year on a Weak Note

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Turkey’s industrial production began the year with a contraction, signaling a loss of momentum in economic activity. According to official data, industrial output fell by 2.8% month-on-month in January, while annual production declined by 1.8%. Analysts say the figures reveal a widening divergence across sectors, with investment-related and energy industries holding up better than consumer-driven manufacturing.

Industrial Output Contracts in January

Turkey’s Industrial Production Index (IPI) fell sharply in January, reversing the modest gains recorded in the final months of 2025.

According to data released by the Turkish Statistical Institute (TÜİK), industrial production adjusted for calendar and seasonal effects declined 2.8% month-on-month in January.

The data followed relatively strong monthly gains late last year:

  • October 2025: +2.5%

  • December 2025: +1.2%

On an annual basis, industrial production decreased 1.8%, while unadjusted data showed a 2.6% annual contraction.

Economists say the January figures suggest that economic activity lost momentum at the start of the year.

Data Weaker Than Expected

Economists at Gedik Investment noted that leading indicators had pointed to a modest increase in industrial output in January. However, the official data showed a sharper decline than expected.

“The annual performance broadly confirms our expectation of weak growth,” the analysts said. “But the 2.8% monthly contraction exceeded our forecasts and indicates a slowdown in economic activity.”

The weak January reading comes after a volatile performance throughout 2025.

Quarterly growth in industrial production last year followed this pattern:

  • Q1 2025: +0.5%

  • Q2 2025: +5.4%

  • Q3 2025: +5.0%

  • Q4 2025: +0.6%

Overall, industrial production increased 2.6% in 2025.

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Sharp Divergence Across Sectors

The January data revealed significant differences across sectors.

Among industries posting annual growth were:

  • Motor vehicle manufacturing: +4.4%

  • Fabricated metal products: +11.7%

  • Electrical equipment manufacturing: +0.9%

  • Energy production: +5.4%

Meanwhile, the broader manufacturing sector contracted 2.5% year-on-year, while mining and quarrying fell 2.8%.

Some areas still showed strong expansion:

  • Electricity, gas and water production: +5.6%

  • Capital goods manufacturing: +8.3%

Analysts say these figures highlight a shift in industrial activity toward investment- and infrastructure-related sectors, while consumer-driven industries remain under pressure.

Consumer-Related Manufacturing Weakens

The most significant declines were observed in sectors linked to consumer demand.

Annual contractions included:

  • Durable consumer goods: –17.2%

  • Non-durable consumer goods: –8.2%

  • Apparel manufacturing: –25.8%

  • Machinery and equipment: –9.2%

  • Textile production: –6.0%

  • Food manufacturing: –2.6%

  • Non-metallic mineral products: –10.2%

  • Plastic and rubber products: –5.9%

Economists say the data suggests weakening domestic demand is beginning to weigh on production.

Monthly Declines Concentrated in Key Industries

Looking at monthly movements adjusted for seasonal and calendar effects, the decline in January was concentrated in several sectors.

The steepest contractions were recorded in:

  • Non-metallic mineral products: –12.4%

  • Fabricated metal products: –5.8%

  • Plastic and rubber products: –4.9%

  • Electrical equipment manufacturing: –4.1%

  • Machinery and equipment: –4.1%

A few sectors recorded modest increases:

  • Apparel manufacturing: +1.4%

  • Textiles: +0.6%

  • Food production: +0.2%

Uneven Industrial Growth

Analysts say the broader trend since early 2025 shows uneven industrial growth.

Cumulative production gains have been concentrated mainly in:

  • investment-related sectors

  • energy production

In contrast, consumer-driven manufacturing remains fragile.

This pattern suggests industrial production continues to contribute to overall economic growth, but the structure of that growth remains unbalanced.

PMI and Electricity Consumption Signal Weakness

Leading indicators also point to a soft industrial outlook.

Turkey’s Manufacturing PMI has remained below the critical 50 threshold since April 2024, indicating contraction in manufacturing activity.

Recent PMI readings were:

  • December: 48.9

  • January: 48.1

  • February: 49.3

Meanwhile, electricity consumption — another key indicator of industrial activity — declined sharply in February.

Electricity demand fell:

  • 1.9% year-on-year

  • 13.5% month-on-month

Despite the modest improvement in PMI, electricity data and anecdotal signals suggest industrial production may continue to face limited monthly contraction in the near term.

Akbank: January Decline Reflects Broader Trend

Economists at Akbank say the January drop may reflect a broader slowdown rather than a temporary correction.

The strong output increases seen in November and December may have been driven by firms bringing production forward ahead of anticipated cost increases.

As a result, the January decline may represent a normalization following that earlier surge.

Risks Remain for the Industrial Sector

While leading indicators for February suggest the possibility of a mild rebound, analysts warn that risks remain elevated.

Key downside risks for industrial production include:

  • uncertain global demand

  • weak export markets

  • high financing costs

  • rising geopolitical tensions

These factors could keep industrial activity volatile and fragile in the coming months.

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