Turkey | December IP surprised on the upside

Industrial Production (IP) grew by 8.6% yoy in calendar adjusted terms, surprising expectations on the upside in December (7% BBVA Research vs. 6.6% market median). Thus, IP growth accelerated to 5.8% yoy in 4Q19 after its yearly contraction of 0.5% in 3Q19. 2019 GDP growth will likely be materialized at above 0.5% yoy.

Key points

• Key points:
• The recovery in IP gained momentum and was mostly broad-based as the monthly increase in IP (sca) was 1.9%, higher than the level of 0.6% in November.
• The acceleration mainly stemmed from the intermediate goods production, which should be promising for further production.
• Lagged effects of looser financial conditions with the support of a relatively stabilized currency, credit impulses and base effects will likely keep the growth rate close to the potential in the first half of the year.
• Our monthly GDP indicator (GBTRGDPY Index in Bloomberg) nowcasts a growth rate of 4.8% yoy in 4Q19 (96% of info) with an acceleration to 6% (32% of info) in January.
• Prudency should be preserved to acquire sustainable growth levels, with also contribution from investment. We maintain our 2020 GDP growth estimate at 4%.

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