Türkiye’s industrial production extended its strong two-year run in August, against a background of surging inflation and the weakening Turkish lira, yet the pace of growth continued to slow, official data showed Wednesday.
The output grew 1% year-over-year in August, the Turkish Statistical Institute (TurkStat) said, a two-year low, but still managing to extend its rise for a 26th consecutive month.
Output made a strong recovery after the initial coronavirus wave in April 2020 and has been expanding since then. But the pace of growth has slowed in recent months, with industrial activity declining due to the wider global slowdown.
Month-over-month, industrial output expanded 2.4% on a calendar and seasonally adjusted basis, the statistical institute said, following a 6.1% contraction in July.
The electricity, gas, steam and air conditioning supply index rose 2.8% from a month ago in August. The manufacturing index climbed 2.7% during the same period, while the mining and quarrying index fell 3.9%.
The Turkish government’s new economic program prioritizes low-interest rates to boost exports, production and investments, aiming to lower inflation and flip the country’s chronic current account deficits to a surplus.
The central bank has cut its policy rate by 200 basis points in the last two months, citing indications of an economic slowdown. Known for opposing higher borrowing costs, President Recep Tayyip Erdoğan has called on the bank to lower rates to single digits by the end of the year.
The industrial production index expanded 2.4% in July, indicating the impact of declining demand due to the global economic slowdown.
The Turkish economy expanded by a better-than-expected 7.6% year-over-year in the second quarter on strong domestic demand and exports. The rate made Türkiye the second-fastest growing economy in the G-20.
The country’s GDP had expanded by 7.5% annually in the second quarter. Last year, the economy bounced back strongly from the COVID-19 pandemic and grew by 11.4%, its highest rate in a decade.