Turkey | Activity proves resilience so far in 2Q

Industrial Production surprised on the upside in March, growing 9.6% y/y in cal. adj. terms. The weaker performance observed in early April turns out to be a recovery in the recent weeks, which increases the upside risks on our current prudent 2022 GDP growth forecast of 2.5% assuming no substantial negative shocks.

Key points

• Key points:
• IP contracted by 1.8% m/m but given the upsurge in February, the quarterly IP growth remained solid by 2% (vs. 3.9% in 4Q21).
• Despite the spill-over effects from the war in Ukraine, activity remains resilient so far as we nowcast a yearly GDP growth rate of near 7.5% for 1Q22 and around 8% as of May.
• According to our big data demand indicators, private consumption gains pace since the second half of April due to most likely Ramadan effects and the shrinkage in investment demand loses some pace.
• Larger negative real interest rates, recent push in credits and loose fiscal policy remain supportive in the short term.
• If the current pace is sustained and no substantial negative shock occurs, risks are clearly tilted to the upside on our prudent 2022 GDP growth forecast of 2.5%, which at the same time generates significant downside risks for the next year.

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