Industrial production in Turkey increases by 4.6 percent

Industrial production in Turkey increased over expectations in April thanks to a strong performance in the manufacturing of capital and intermediate goods.

Production rose 4.6 percent over the same month in the previous year, surpassing analysts’ forecasts that predicted an increase of only 3.9 percent, according to data that was announced by the Turkish Statistical Institute (TÜİK) on June 9.

On a monthly basis, industrial production rose by 1 percent compared to previous months. Meanwhile, calendar-adjusted industrial production increased by 4.6 percent year-on-year.

According to the non-adjusted index, both intermediate goods and capital manufacturing advanced by 4.4 and 5.7 percent respectively.

“While the increase in intermediate goods stemmed from strong exports, the rise in capital goods indicates that investment spending in domestic demand is increasing,” Odeabank Economist İnanç Sözer told Reuters, adding that spending is likely to come from the construction sector.

Sözer also warned that a moderate rise in industry production is mostly shouldered by exports, rather than domestic spending as the government’s economic program intends to do.

“Therefore the correlation between industrial production and national income growth weakens,” he said, implying strong industry data should not lead to false hopes over growth.

Economists and leading international organizations have been warning that the Turkish economic growth could be hampered by lower investment and capital inflow as volatile currency rates, high interest rates that made borrowing costlier and political tension that rocked confidence in the country remain in effect.