Turkish industrial production rises in December, but outlook  not favorable

Turkey’s industrial production registered an annual increase of 1.6% in December, the country’s statistical authority said Friday.

While the mining and quarrying subindex fell 1.2%, the manufacturing index, and electricity, gas, steam and air conditioning supply index rose 2.1% and 4.5%, respectively, the Turkish Statistical Institute (TurkStat) said.

Yatirim Finansman research comment on industrial production

This was the first monthly increase recorded in the last 6 months. Consensus expectations were that Industrial Production would increase by 0.3% on a monthly basis and 0.2% on an annual basis. However, unadjusted figures contracted by 1.3% on an annual basis. Industrial Production Index, adjusted for seasonal and calendar effects, continued its trend below the historical average.


Industrial Production presented a weak outlook in 4Q23, but Economic Growth is close to potential in all of 2023. This was the 3rd and last data of Industrial Production in 4Q2023, one of the most important leading indicators of economic growth. In 4Q23, Industrial Production increased by 0.7% in the unadjusted series and 1.0% in the seasonally adjusted series on an annual basis, while it contracted by 0.8% in the seasonally adjusted series on a quarterly basis.


In 2023, Industrial Production increased by 0.9% on an annual basis. Let’s also note that the services sector gave a more positive outlook in 4Q23, despite the weak/mixed outlook on the industrial side.


Economic growth figures for the 4Q23 period seem to be realized at levels close to potential. In the light of these data, our first calculations show that economic growth is around 4.0% on an annual basis and 1.0% on a quarterly basis in the 4Q23 period. It indicates that it could be around 4.5% in the whole of 2023.

On the other hand, let us remind you that the CBRT has increased the policy rate by 3650 basis points since June 22. The cumulative and delayed effects of the tightening in monetary policy may put downward pressure on domestic demand in the future.

Additionally, let us note that it is possible that foreign demand will weaken due to tight financial conditions globally. Therefore, even if wage increases support domestic demand for a while, it seems quite likely that economic activity will lose momentum in the future.

Our economic growth forecast for 2024 is at 3.5%. Let us also note that according to the MTP, the government’s growth forecast for 2023 is 4.4% and its growth forecast for 2024 is 4.0%. The next industrial production data will be announced on March 12.

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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.