Türkiye | Strong acceleration in 2Q

Industrial production (IP) increased by 1.6% m/m in seasonal and calendar adjusted series, resulting in the 2.3% q/q acceleration of activity in 2Q (vs. 0.5% q/q in 1Q). We expect GDP growth to be 4.5% in 2023 thanks to the strong growth pattern in 1H23, especially considering the soft landing scenario.

Key points

• Key points:
• The 2.3% q/q acceleration of activity in 2Q showed that the devastating impact of the quakes in 1Q (0.5% q/q in 1Q23 vs. 2% q/q in 4Q22) rapidly recovered thanks to the support provided to the quake regions and robust domestic demand on loose policies.
• Seasonal and calendar adjusted turnover indices in real terms indicate the sharp increase in industry, while there was a slight decline in construction and services in June. However, quarterly trends remained strong in all sectors, signaling that non-industry sectors would maintain strong contribution to economic activity in 2Q.
• Despite the rapid supply-side recovery in the 2Q, retail sales, our big data consumption indicators and strong consumption goods imports revealed that the aggregate demand, especially driven by the private consumption, was stronger.
• Our monthly GDP indicator nowcasts an annual growth of 4.3% for 2Q with 100% of information, signaling close to 3% q/q (vs. 0.3% in 1Q), while only pointing out slight deceleration in 3Q so far since it nowcasts 5.8% (27% of info.) and 5.7% (23% of info) growth for July and August, respectively.
• Despite very gradual normalization in monetary policy coupled with macro prudential policies initiated by the new economy management to balance inflation and the current account deficit as well as to achieve soft landing, rebalancing of the output gap has not materialized yet in the 3Q.

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