8 Şubat 2011 Salı

Turkish industrial output jumps, supports overall growth


Turkey’s industrial production surged 5.7 percent in December from a month earlier, the biggest increase since the data series started in 2005, according to official data released Tuesday.

Output rose 17.4 percent from December 2009 when adjusted for the number of working days, Bloomberg reported. Without adjustment, the annual figure gained 16.9 percent.

The annual rise in intermediary goods production was a massive 24.4 percent, while capital goods production surged by 34.2 percent. “This shows growth has strengthened and this strength will continue in the period ahead,” Fortis Bank economists said in a note to investors.

Growth is imbalanced in favor of domestic demand, while sales to European markets are “sluggish,” Central Bank Gov. Durmuş Yılmaz said as he spoke Monday to a group of analysts in London. Yılmaz says the bank is tightening monetary conditions by raising reserve requirements for banks at the same time as cutting the benchmark interest rate to weaken the Turkish Lira and help exports.

“This acceleration is much larger than expected, it’s a strong positive surprise,” Bloomberg quoted İnan Demir, chief economist for Finansbank in Istanbul, as saying. “It implies gross domestic product, or GDP, growth of 8 or 9 percent in the fourth quarter and that could push full-year growth close to 9 percent.”

Robust domestic demand
“Looking into the whole of 2010, domestic-demand weighted sectors such as food, chemicals and plastics have displayed an output expansion that rose above the contraction during the crisis,” said Akbank economists in a research note. “This verifies the robustness in domestic demand.” The economists said the strong performance of the industry could force the Central Bank to keep rates on hold in this month’s Monetary Policy Committee meeting.

“The possibility that 2010 GDP growth will be at over 8 percent has increased,” said Veyis Fertekligil, chief economist at T-Bank. Fertekligil expects lower growth rates in industrial production this year. “Having said that, we can expect a boost in the production of exporter sectors, due to the depreciation [of the lira],” he said.

The data may force the Central Bank to be more cautious against inflationary pressures, according to the chief economist. “The possibility of another raise in reserve requirements is stronger now.”

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