Turkey | May IP strengthened after the reopening

Industrial Production grew by 41% yoy in calendar adjusted terms in May, implying 39% yoy growth in unadjusted series, boosted by base effects. Given strong momentum so far and upward revisions in global growth we revise our 2021 GDP growth forecast on the upside to 8% and downgrade our 2022 GDP growth forecast to 4%.

Key points

• Key points:
• Seas. and cal. adjusted IP increased by 1.3% mom (turned positive after temporary contraction in April indicating correction after reopening in late May), where main contribution came from intermediate goods production with 3.9% mom.
• IP quarterly increase of 0.4% indicated some loss of momentum in April-May period (vs. 2.6% in 1Q21), when the further reopening in June is considered, the deceleration in the qoq growth rate might still be limited.
• Our monthly GDP indicator nowcasts a yearly growth rate of 26% in June (69% info) and 20% in July (12% info) reflecting still a moderate positive quarterly growth rate in 2Q.
• Tighter financial conditions and potential indirect effects from the employment after the expiration of ban on firings will likely result in an adjustment in the second half of the year
• Current solid momentum and expected pick-up in global economic activity, we upgrade our 2021 GDP forecast to 8% even though we still assume an adjustment in the second half of the year.

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