Turkey: Industrial Production still robust before currency shock - BBVA

Industrial Production (IP) in Turkey increased by 8.5% in October from a year earlier, in line with consensus. Analysts at BBVA point out GDP growth in 2021 will be around 10.5-11%, above their current forecast of 9.5%. All these took place before the recent devaluation of the lira. 

Key Quotes: 

“IP still doesn’t indicate a clear slowdown in economic activity given the slight recovery in monthly growth of 0.6% which was a -1.5% previous month.”

“Our Big Data demand proxies and other high frequency indicators still displayed solid momentum in November and December. Hence, our monthly GDP indicator nowcasts a yearly growth rate of 8.1% for November (52% of info) and 8.5% yoy for December (33% of info), indicating a quarterly growth rate of 2% for 4Q.”

“Current strong momentum, looser economic policies, remaining robust global activity would support the economy. However the latest currency shock , uncertainties tied to new Covid-19 variant and tighter financial conditions will likely be downside factors on 2022 GDP growth.”