Macro Focus: Recovery trend continues despite momentum loss

In February, IP increased by 0.1% MoM and 8.8% on a YoY. According to the consensus, the second IP data set for 1Q21 was expected to increase by 9.2% YoY (YF: +7.1%, Jan.21: +11.3%, Feb.20: +8.2%). Additionally,  unadjusted IP increased by 5.7% YoY (Feb.20: +11.3%). On a monthly basis, only capital goods recorded an increase whereas intermediate, durable, non-durable and energy goods contracted. Intermediate goods recorded first monthly contraction after 9-month long consecutive recovery. A 3.3% of monthly rebound in capital goods came after 3% MoM drop in the previous month. We should note that only energy goods indicate a contraction in 3-month moving average calendar and seasonally adjusted figures in monthly basis.  On the other hand, all of the main industrial groupings continue to stay at the positive levels in 3-month moving average figures in yearly basis.


Manufacturing sector recorded increases of 0.2% MoM and 9.3% of YoY.  9 of 24 subsectors under manufacturing recorded monthly increases. The highest positive contributions came from the manufacture of other transport equipment (MoM contr.: +0.8pps) manufacture of machinery and equipment n.e.c. (MoM contr.: +0.2pps) and manufacture of electrical equipments (MoM contr.: +0.2pps) while the highest negative contributions came from manufacture of textiles (MoM contr.: -0.2pps), manufacture of computer, electronic and optical products (MoM contr.: -0.2pps) and manufacture of motor vehicles, trailers and semi-trailers (MoM contr.: -0.1pps).


IP continue to give positive signs for economic growth of 1Q21. IP, which is one of the most important leading indicator of the economic growth, indicated that the strong course of the economic activity continued at the first two-month of 2021 despite the some momentum loss. 3-month moving average figures indicate a 8.7% of YoY IP growth in unadjusted basis and 9.7% YoY growth in SA figures whereas calendar and seasonally adjust figure pointed around 1% of QoQ growth. Leading indicators and high frequency data pointed that the economic growth gained momentum in March again. Hence, we could continue to see strong YoY Macro Focus figures in 1Q21. Our annual economic growth estimate for 2021 is at 4.8%. In addition to the better outlook than expected in Q1 and strong positive basis in Q2, expected recovery trend in 2H are our key assumptions on this estimate. On the other hand, we should state that the increasing needs of tight monetary policy due to the developments related with the inflation outlook and Lira currency, and upward trend new coronavirus cases are important downside risks on our annual economic growth estimate. Pandemic related developments and tightness level of the financial conditions would continue to be the key drivers of the economic activity. Turkey’s third  and last IP data set (March) for 1Q21 to be announced on May 11 whereas 1Q21 GDP data would be announced on May 31.



Source: Y. F. Securities Research