Industrial production declines due to cost pressure while demand grows in foreign markets
While demand in export markets revived and reached a 52-month peak, high financing costs and barriers to accessing credit caused industrial production to fall.
A contrasting picture is emerging in the Turkish economy regarding production and external demand. Despite the increase in external demand and exports in foreign markets, high interest rates and financing problems caused industrial production to decline in August.
Decline in Industrial Production
According to data from the Turkish Statistical Institute, industrial production decreased by 1.9 percent in August compared to the same month of the previous year, and by 1 percent on a monthly basis.
The annual decrease in the manufacturing industry was 2.5 percent, and the monthly decrease was 1.6 percent, with this contraction being the main reason for the decline in total production.
Financing and Credit Barriers
Industrialists being crushed under high interest and financing expenses, coupled with an increasing need for working capital, limits reflections on production.
The difficulty in finding loans under favorable conditions eliminates companies' opportunities for raw material procurement and capacity expansion.
Revival in Export Markets
The Istanbul Chamber of Industry Turkey Export Markets Climate Index rose to 53.2 in September, reaching its highest level in the last 52 months and expanding for the fifth consecutive month.
While production growth was recorded in nine of Turkey's top 10 export markets, the recovery in European economies also presents opportunities for manufacturers.
Export and Import Figures
Turkey's exports increased by 15.4 percent annually in September to reach 25 billion 976 million dollars, while imports rose by 5.9 percent to reach 31 billion 208 million dollars.
In the January-September period, exports totaled 210.9 billion dollars and imports totaled 282 billion dollars.