Industrial production continues recovery, though base effect still strong

According to data released by the Turkish Statistics Institute (TurkStat) on Monday, the industrial production index fell on an annual basis but showed signs that it improved gradually throughout the year after a large dip in 2008.

The index started falling from its two-year peak of 123.9 in May 2008 to 84.6 in February 2009 and has been recovering gradually since, though the recovery is partially due to a base effect.

Foreign Trade Minister Zafer Çağlayan noted yesterday in a press release that the Turkish economy “was seeing the light at the end of the tunnel” as a result of a 30.3 percent increase in exports in December along with an improvement in industrial production. He added that “we would have been at this positive position much earlier” had the Turkish banking system supported industry more during the economic crisis.

İstanbul Chamber of Industry (ISO) Chairman Tanıl Küçük, in a written explanation to Today’s Zaman, noted that a 17.8 percent contraction was experienced in December 2008 over the same period of 2007, meaning that the increase seen in the last month of 2009 was mostly due to a base effect that would “create opportunities for growth in 2010.” He added, however, that the increase was above his expectations. Regarding the increase in the index beginning in October, he said this recovery was slightly unstable but still likely to improve well into the first half of 2010.

Turkish Confederation of Businessmen and Industrialists (TUSKON) President Rızanur Meral, speaking to Today’s Zaman, stated that the industrial production figures released yesterday were expected, adding that exports increased by 12.5 percent in January over the same month of 2009 and by 50 percent for the first week of February. He added that all of these developments, along with positive predictions by international economic organizations such as the Organization for Economic Cooperation and Development (OECD), were pointing to a “much better year” for Turkey than 2009.

When adjusting for seasonal and calendar effects, the increases are less pronounced. The index increased by 8.3 percent in December compared to December 2008 and only grew by 0.7 percent over the previous month on a seasonally adjusted basis. The latter figure was a more substantial 8.7 percent when unadjusted. On a yearly basis, 2009 saw a 10.3 percent seasonally adjusted fall in the index compared to 2008.

The greatest increase in the index occurred in the intermediary goods industry, which experienced a 33.2 percent jump in December compared to the same period of the previous year. The mining sector index rose by 15.4 percent in December over the same month of 2008. Moreover, the manufacturing sector index grew by 28 percent and the utilities index by 10.9 percent.

The subgroup that saw the greatest increase in the industrial production index was the manufacturing of motor vehicles, trailers and semi-trailers, with an 85.3 percent rise over the same month of 2008. Manufacturing of office, accounting and computing equipment saw the greatest fall in the index, with a -31.3 percent drop compared to the same month of 2008, though it still managed to post the greatest increase of any subgroup compared to the month before, with a 68 percent rise.