July’s Coup Attempt Still Weighing on Turkey Industrial Output

  • Output unexpectedly falls 3.1% in September on durable goods
  • Excluding July, September annualized decline worst since 2009

Turkey’s industrial output unexpectedly shrank in September, providing more evidence that the economy has yet to overcome the fallout from an attempted coup earlier this year.

Output adjusted for working days shrank 3.1 percent from a year earlier, the state statistics institute said on Tuesday, the biggest drop in six years excluding July -- the month of the failed putsch. The median estimate in a Bloomberg survey was a 2.5 percent expansion.

The report indicates that Turkish manufacturers have failed to increase output, even after the government announced higher spending on major infrastructure projects next year and eased curbs on borrowing to revive consumer demand. Taken in conjunction with weak services output data, Thursday’s industrial numbers suggest the economy may be shrinking in the third quarter, according to QNB Finansbank Chief Economist Gokce Celik.

“The sharp slowdown in the third quarter will push the full-year growth figure down,” Celik said in an e-mailed note. “We now revise our 2016 full-year GDP growth forecast to 2.1 percent, down from 3 percent.”

The fall in industrial output was led by an almost 10 percent slump in production of durable goods. Food production also fell, indicating consumers are now cutting back on everything from furniture to food to textiles -- a worrying signal as household demand makes up roughly two-thirds of gross domestic product.

The lira, which was already trading at a record low, fell 0.4 percent to 3.1805 per dollar at 12:29 p.m. in Istanbul.

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