Industrial output figures send strong signs of recovery

Industrial output was down 6.8 percent in October 2008 -- when the domestic economy was being rocked hard by the global economic crisis -- compared to the October figure of 2007.

The industrial production index values were welcomed by the business world and capital markets. Having dropped 0.37 percent on Monday, the İstanbul Stock Exchange (İMKB) rallied at the first trading session by 1.7 percent on Tuesday to hit 50,764.33 points.

Minister of Industry and Trade Nihat Ergün said the October industrial production numbers clearly demonstrate that an economic recovery is in evidence. He predicted that in light of these figures, the growth rate of gross domestic product (GDP) in the last quarter will also become positive, marking an upturn after many months of contraction. “The tendency toward recovery in domestic and external demand as well as a number of positive developments in the local economy and abroad has been effective in this increase,” he said.

Professor Seyfettin Gürsel and research assistant Onur Altındağ from Bahçeşehir University’s Center for Economic and Social Research (BETAM) described the increase in the industrial production index as a “very strong move,” but did not fail to warn that the effect of the sharp decline in October 2008 must not be kept out of consideration while deliberating on the figures. Adjusting the numbers by removing calendar and seasonal effects, Gürsel and his colleague concluded that the Industrial Production Index actually rose by only 2.9 percent, from 104.9 to 108, which still marks the largest increase since April 2009, when an atmosphere of recovery first appeared in the economy.

‘Depleting stocks played a vital role’

International investment bank JPMorgan also praised the latest figures in a written note, underlining that the depleting stocks played a vital role in it. It recalled estimates that industrial production would be down 3.2 percent. For JPMorgan, three factors were primarily responsible for this “surprise” number: 1) more working days this year compared to the same month of the previous year due to the Eid al-Fitr holiday; 2) a rally in external demand and the ensuing rise in exports; and 3) rapid depletion of goods in stock thanks to reinvigoration of the markets.

Assessing the figures, Gaziantep Chamber of Industry (GSO) President Nejat Koçer said the upswing in the industrial production index must be perceived as a positive sign for recovery. It is also a glimpse into positive prospects for the months ahead, he added. Koçer said in a written statement that the increasing production will hopefully lead to an increase in employment, too. Commenting on the surprise hike in industrial production numbers, Turkish Exporters Assembly (TİM) President Mehmet Büyükekşi said Turkey has evidently left the worst of the crisis behind and will enjoy increases in exports, production, employment and growth rates in the period ahead.

All main sectors enjoyed the climb

In industrial sub-sectors, output in mining and quarrying increased 5.3 percent in October over the same month a year ago, while manufacturing rose 6.6 percent and utilities by 6.4 percent. The industrial production index values were 8.9 percent, -8.2 percent and -0.4 percent for mining, manufacturing and utilities, respectively, in October 2008. With respect to the main industry groups classification, on the other hand, the only decrease was in the manufacturing of capital goods, which was down 3 percent in the 10th month over a year ago. The other groups in this classification all enjoyed an upswing. Energy was up 1.9 percent, intermediary goods by 11 percent, nondurable consumer goods by 8.1 percent and durable consumer goods by 7 percent.

As regards the sub-sectors of the manufacturing industry, the highest rate of increase was witnessed in the production of medical and optical devices by 38.3 percent. Coal mining increased by 0.6 percent, whereas other mining activities and quarrying rose 6 percent in total. Already having suffered a loss in sales with a comprehensive smoking ban, the manufacture of tobacco products was up 2.7 percent. Food products saw a 10.8 percent increase in production in October.

Crude oil and natural gas extraction figures also saw a humble rise of 1.2 percent. Textiles, which sustained sharp declines amidst the crisis, also recovered by achieving growth of 6 percent.