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January 8, 2015
Data Snapshot
INDUSTRIAL PRODUCTION
Weakness in IP accelerates in November…
Gülay Elif Girgin
Chief Economist
+90 212 334 91 04
[email protected]
Turkstat has released the Nov14 IP print, wherein the IP index posted 1.2% YoY contraction.
The market expectation and Seker Invest forecast had been at 0.2% and 3% YoY growth,
respectively. Calendar effect adjusted IP posted 0.7% YoY growth in November.
Seasonality and calendar-effect adjusted (SCE) IP posted 0.2% MoM contraction in November for
the second consecutive month.
Figure 1: Industrial Production Index YoY growth (%)
14%
YoY % IP
6%
3MA MoM %SA IP (RHS)
12%
10%
8%
5%
4%
3%
2%
6%
1%
4%
0%
2%
-1%
0%
-2%
-2%
-3%
-4%
-4%
-6%
-5%
Source: Turkstat, Turkey Data Monitor
In the details, “basic metals” emerged as the worst performer at 8.2% YoY contraction,
stealing ~76 bps from the headline. The second worst performer is “textiles” on 3.7% YoY
contraction shaving off ~43 bps from the headline. “Fabricated metal products” also performed
weakly contracting 8.9% YoY (36 bps pressure on the headline). Apart from “manufacture of
pharmaceutical products” that contributed 40 bps to the headline print, all the main sectors
posted YoY contractions in November. As may be recalled, this sector ranked as the main
contributor, at 147 bps, to the headline in October.
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January 8, 2015
Figure 2: Contribution to headline manufacturing growth (pps)
-0.90
Basic Metal Industry
Textile Industry
Fabricated Metal Products (exc. machinery)
Machinery and Equipment
Man. of Motor Vehicles, Trailers, Semi-Trailers
Man. of computer, electronic and optical products
Man. of Electrical Equipment
Wearing Apparel
Man. of Chemicals
Man. of Coke and Refined Petroleum
Food Products
Man. of Paper and Paper Product
Man. of Other Transport Equipment
Repair of Machinery and Equipment
Tobacco Products
-0.60
-0.30
Nov14
0.00
0.30
0.60
Jan-Nov14
Source: Turkstat, Seker Invest
Comment:
As might be recalled, despite the base year effect, October’s figure, at 4.4% YoY growth, was short of
expectations and it was mostly surprise sub-items such as “pharmaceuticals” and “tobacco” that
supported the headline for the month as the traditional sectors performed weakly. Thus, we had
already perceived the signals of a weak November figure from October's print.
However, the November figure came in remarkably below expectations at 1.2% YoY contraction. To
clear off the data from the base year effect, which will remain a drag on IP in December, we look at
SCE. Yet, the print does not imply any recovery in economic activity as the MoM contraction continued
for the second consecutive month, as well. Accordingly, the main indicator of GDP growth performs
weakly in 4Q14.
Regarding GDP growth front, IIIQ14 GDP growth was only 1.7% YoY, below expectations, implying 2.9%
GDP growth for 9M14. As of November, for the IVQ, we do not get any convincing signals of a recovery
in economic activity as the average YoY growth in IP for Oct-Nov14 period is 1.6%, thus below OctNov13 average YoY growth of 2.1%. Furthermore, as we mentioned above, Dec14 IP might not be
strong either, due to both the base year effect and still-anemic domestic economic activity.
Accordingly, we keep our 2014 and 2015YE GDP growth forecast at 3%, vs. the government’s
revised GDP growth forecast of *3.3% and 4%, respectively. Meanwhile, in its recent Article IV
Consultation, the IMF announced a 2014 GDP growth forecast of 3% and medium-term growth
forecast of 3.5%, versus the government’s medium-term potential growth target of 5%.
* The Government revised down its 2014&2015 GDP growth forecasts from 4% to 3.3%, and from 5% to 4%,
respectively, in the 2015-2017 Medium Term Economic Plan.
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January 8, 2015
ŞEKER INVEST RESEARCH
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TURKEY
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Gulay Elif Girgin
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DISCLAIMER
I, Gülay Elif Girgin, hereby certify that the views expressed in this research accurately reflect my personal views
about the subject securities and issuers. I also certify that no part of my compensation was, is or will be, directly
or indirectly, related to the specific recommendations or views expressed in this report.
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