Turkish factory output and current account disappoint

September 13, 2021

ISTANBUL (Reuters) – Turkish industrial output rose 8.7% year-on-year in July, much less than forecast after rebounding strongly in previous months, while the current account deficit was wider than expected, data showed on Monday.

The disappointing data came after a strong run in which rebounds in consumption, exports and tourism set the economy on a path to near 10% overall growth this year, leaving last year’s initial coronavirus fallout behind.

Month-on-month, industrial output shrank 4.2% in July on a calendar and seasonally adjusted basis, the Turkish Statistical Institute said.

In a Reuters poll, production was forecast to have risen 15.1% annually in July after output surged 23.9% in June.

Separate data showed a current account deficit of $683 million in July, compared with a poll forecast of $570 million.

The July balance had been expected to show a relatively small deficit, due largely to a partial recovery in tourism revenues. The deficit narrowed from $1.122 billion in June.

The lira was 0.3% stronger at 8.4580 against the dollar after the data. But it has shed 2.5% in the last four trading days and some analysts expect more volatility heading into a monetary policy meeting on Sept. 23.

Societe Generale on Monday said the lira would likely weaken to 8.85 by year end, adding the central bank increasingly risks making the mistake of cutting interest rates too early given political pressure for stimulus.

Many Turkish factories halted work in March last year, soon after the first COVID-19 infection was recorded. Output dropped 31.4% in April and 19.9% in May before a recovery began in June.

Throughout the pandemic Turkey imposed temporary curfews and business closures, including a tough but brief lockdown in April and May of this year. The measures were lifted in June.

(Reporting by Oben Mumcuoglu and Daren Butler; Editing by Jonathan Spicer)

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