Türkiye | Further slow-down in economic activity

Industrial production (IP) slightly fell by 0.1% m/m in seas. and cal. adj. series, corresponding to 4.0% y/y growth in cal. adj. terms. Given our soft-landing assumption with expected fiscal impulse and support from potential foreign capital inflow, we maintain our GDP growth forecast at 4.5% for 2023 and at 3.5% for 2024.

Key points

• Key points:
• On quarterly trends, industrial activity geared down sharply in 3Q (0.3% q/q vs. vs. 2.1% q/q in 2Q) led by the quarterly contractions of capital goods and consumer (mostly non-durable) goods production.
• On demand side, quarterly slow-down in retail sales together with monthly contraction in the last two months, signalled that domestic demand has started to lose momentum as confirmed by our big data indicators indicating further deceleration in consumption.
• Our monthly GDP indicator nowcasts 6-6.5% annual GDP growth in 3Q and 4.4% as of November (with 23% info), showing nearly 1% q/q in 3Q but a faster deceleration in 4Q with a slightly negative quarterly growth rate.
• Gradual policy normalization accompanied with macro-prudential policies have started to lead domestic demand to decelerate but the demand is still stronger than supply, indicating still high positive output gap.

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