Industrial Production and Growth

First of all, I condemn the nefarious attacks in New Zealand as well as all acts of verbal and physical violence against the faithful of all religions. It’s really hard to go back to the mundane events of daily life after a horrible incident such as this. We, however, need to stand strong and fight back against the evil forces.

Industrial production data released on Friday turned out to be a bit confusing. We can see there’s a certain decline year-on-year base in contrast with an increase in monthly base.

However, there are questions that need to be answered: According to some experts, there’s slight improvement, while the others say that we should not get our hopes up yet. As for me, I’m not really sure what to think as GDP growth rate is always calculated based on the statistics in the same quarter of previous year. If indeed there’s a decline in economic activities, it will take some time for the results of a strong improvement can reflect on GDP growth figures. So, we better have patience and wait.

“Numbers are being revised…”

According to the information provided, TurkStat is retrospectively revising the first and second quarter data of the last year. It’s only natural for TurkStat to revise these numbers as official statistics keep coming in. As a general rule, if the performance in the same quarter of the previous year has been bad, the next quarter usually turns out to be comparatively good. There’s a high likelihood that 2019 GDP growth rate will turn out to be positive by the help of “base effect” and revisions. There are, however, some problems.

For instance, everybody’s complaining about liquidity squeeze. Well, it shows that the economic activities gather pace again if the necessary funds are found. It looks like a huge staff change and replacement process in the private sector is ahead. I really can’t figure out how the capital flow trend will be after the elections.

In short, while TurkStat is working at high pressure to revise GDP growth data, there are also similar efforts aimed at inflation control. However, if the discordance between market reality and official statistics grows larger, we should know that this will have direct impacts on exchange and interest rates.