Istanbul: Turkish industrial production, a leading indicator of the strength of the economy, rose 6.9 per cent on the year in July, comfortably topping market forecasts and suggesting that Turkey's red-hot growth isn't cooling as rapidly as economists had expected.
Data from the national statistics institute, or TUIK, showed yesterday that industrial production fell 0.1 per cent on the month in July and gained 6.9 per cent on the year. July's output dramatically overshot the 4.0 per cent annual growth rate forecast by economists.
July's industrial output data was also higher than the 6.7 per cent annual rise recorded in June, indicating that Turkey's fast-growing economy has maintained momentum.
Turkish assets were little moved by the news. Economists said the news pointed to a stronger third quarter gross domestic product readout than the market had initially expected and would likely dissuade Turkey's central bank from reducing the benchmark policy rate from its current low of 5.75 per cent.
"July data is important, since it was the first solid indication that economic activity might be in fact stronger than expected," said Ozgur Altug, Chief Economist at Istanbul-based BCG Capital Partners.
A breakdown of the data showed that annual gains were broad-based. Production soared in motor vehicle, machinery and furniture sectors, as manufacturing fired on all cylinders to keep up with still-surging consumer demand.
Economists had expected a slowdown after data from a survey conducted by HSBC and Markit Economics showed last week that activity in Turkey's manufacturing sector declined in August, after increasing consistently since mid-2009.
The Turkish economy grew by 11 per cent in the first quarter, outstripping China and confirming Turkey as Eurasia's rising tiger.
