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Monday figures by Turkey’s statistics institute show that the country’s industrial production has increased by 6.7 percent in June compared with the same month last year. The figure, which is below the market expectations, is signaling a slowdown in the over-heated Turkish economy, according to economists
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Growth in Turkey’s industrial production continued slowing down in June compared to the same month last year, official data released on Monday revealed.
The country’s industrial production increased by 6.7 percent in June, less than the market expectations of 8 percent, according to data published by Turkey’s statistics authority TurkStat on Monday. The figure was 8 percent in May and 8.8 percent in April.
Meanwhile, the seasonally adjusted industrial production fell for the fifth consecutive month this year, dropping by 0.9 percent in June compared to the same month last year.
The industrial product increased, however, by 1.1 percent in June compared to May this year.
Manufacturing posted a growth of 7.5 percent in June, compared to the same month the previous year. Electricity, gas, steam and cooling systems production and distribution also grew by 4 percent in the same period. Mining, on the other hand, contracted by 2.2 percent compared to June 2010.
The furniture sector posted one of the fastest growth rates at 28 percent, whereas the automotive sector rose by 13.1 percent in June, compared to the same month the previous year. Meanwhile, textile production contracted by 2.1 percent, the TurkStat data showed.
Export related sectors, such as textiles, continue to suffer from external demand conditions mainly in Europe, according to a report by Turkey Economy Bank, or TEB, on Monday.
The figures for industrial production in Turkey during June this year were “rather encouraging” considering the global economic situation, Turkish Industry Minister Nihat Ergün said Monday, according to an Anatolia news report. “We expect the [industrial production] growth rate will be about 7 percent by the end of the year.”
TEB, however, warned of a possible downward trend of the industrial production toward the third quarter. “The June industrial production [figures] reading shows that the gross domestic production growth in the second quarter [of 2011] was broadly flat with risks on the downside,” the TEB report reckoned.
“Signals coming from the industrial production confirm the Central Bank’s scenario of a slowdown [in economic growth]” Banu Tokalı of Destek Securities said in a short note to investors on Monday. However, this is not sufficient to clear away the market vulnerability that rose after the shock interest rate cut introduced by the Central Bank, she added.
The global events since 2010’s fourth quarter also show that external demand is set to weaken further in the third quarter, the TEB report read. “While the data strengthens the hands of Turkey’s Central Bank concerning their controversial decision to cut rates, we believe the Bank has broadly exhausted its room to push gross domestic product growth through further monetary easing.”
The report also warned that the widening and considerably large current account deficit and inflation rate had left little room for further monetary and fiscal easing.
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Source : hurriyetdailynews.com
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