May industrial output signals solid growth for Q2

13.07.2012

National industrial production increased by 5.9 percent in May over the same month a year earlier, the Turkish Statistics Institute (TurkStat) said on Monday, indicating that the country´s economic growth will be strong this year as well.

Içerigi Paylas |

With the government's active fiscal policy, which has been supported by the central bank's crackdown on credit expansion, there were previously some fears that Turkey's gross domestic product (GDP) might see only slight growth this year. That line of thinking was dealt one blow when the 3.2 percent rate of economic growth was announced at the beginning of last week. Monday's announcement of a nearly 6 percent industrial production increase dealt a second and indeed heavier blow. “What we see here is that concerns related to economic growth were further eased,” said Gülizar Türk of Anadolu Investments. “Yet we have to keep watching the figures to come," she added, in remarks to the Anatolia news agency after the news hit online outlets on Monday.

According to TurkStat, the biggest increase in production over last year was observed in the field of energy with 7.3 percent. It was followed by the manufacturing sector with 5.8 percent and mining with 4.2 percent. “These are far better than the expectations,” Gizem Öztok Altınsaç from Garanti Investments said, also speaking to Anatolia.

The news, however, failed to lift spirits at the stock and money markets. The benchmark İMKB-100 index of the İstanbul Stock Exchange (İMKB) dropped by 0.3 percent to just over 62,500 points in early trading in the first session of the day on Monday. The Turkish lira, likewise, depreciated against both the US dollar and the euro. A dollar was equal to TL 1.8229, 0.24 percent higher than it was at Friday's close, and the euro was trading 0.2 percent higher at TL 1.2380 by 12:00 (GMT+2).

The 3.2 percent economic growth attained in the January-March period was the lowest rate Turkey saw in a quarter since the final quarter of 2009, when its economy started rebounding from the immediate impact of the global financial crisis. Yet it stands solid enough at a time when the EU, its main trading partner, anticipates poor growth, if not none at all, this year.

The Turkish economy grew by nearly 7 percent on average each year for the six years between 2002 and 2008 but could not remain unaffected when financial turmoil with global consequences erupted with the mortgage crisis in the US. Turkey's economic growth ground to a halt in 2008, only to be replaced by a contraction of some 5 percent for the whole year in 2009. Quickly weathering the storm thanks to its robust financial sector and powerful domestic market, however, it started posting high growth rates in the last three months of the year. The national GDP expanded by some 9 percent in 2010 and by another 8.5 percent last year. Accompanying such profound economic growth were a widening current account deficit (CAD) and two-digit consumer inflation, which led some observers to discuss a hard landing as a scenario for the Turkish economy in 2012.

The announcement of a 5.9 percent rate of industrial production growth for the fifth month of the year added to the good news related to the CAD and inflation, both of which seem to have been tamed by appropriate fiscal and monetary policies. According to the Central Bank of Turkey, the country's CAD dropped by more than a quarter to $21 billion in the first four months of 2012, compared to nearly $30 billion during the same period in 2011. The figures led Economy Minister Zafer Çağlayan to pronounce the CAD issue dead. “We told you we were going to beat the CAD in Turkey. The data show that this issue is over,” he told a press conference in İstanbul on June 11.

Source : todayszaman.com
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