Let’s start guessing what will happen in the fourth quarter.

As we are about to enter the New Year, I figured I should make a brief summary of economic indicators data released recently.

Statistics released on Monday have given us some warning signs that GDP growth dynamics within the fourth quarter might be negative. I expect unemployment rate to hit around 13% over the next period. So, I must admit that I wasn’t surprised to see that unemployment rate in Turkey currently stands at 11.4 percent.

Industrial Production Data in September, however, indicated an obvious economic shrinkage. If Industrial Production rate remains the same for the next following months, we should then expect growth shrinkage in Turkey varying between -0.5% and -1%. Considering the decline in retail trade volume in October, I can see how important are the tax cuts implemented in the first week of November, which have also brought certain impact on the demand, however, we have to wait for Turkey Manufacturing PMI in November to see whether these tax cuts will be helpful or not in boosting demand-driven manufacturing.

“Negative growth not a remote possibility”

Considering inventory depletion in the third quarter, it’s a spot-on decision to encourage private sector to produce more by boosting the demand, however, Industrial Production Capacity Utilization Rates in November have fallen to 73%. It is a known fact that the capacity is maintained by export industries. Therefore, we can say that steps taken to boost the domestic demand are not enough to encourage producers to produce more.

In the upcoming period, we can expect companies with high amounts of debt to try to repay their debts by selling assets or try to increase their profit by engaging in large projects. I especially believe that creditors should be very careful with debtor behaviour.