Turkey Industrial Production: Particularly Strong


The industrial production data released by Turkish Stats Office yesterday highlighted that the economic activity in March was particularly strong in March. The IP index was up by 2.6% y/y despite the reading was 40 bps lower compared to the linked month. The sub-index of machinery setup was 13.8% higher which led us giving the private investment a pat on the back. We might be able to see private investment supporting the economy in 1Q 2016 at last.

The changes in the IP index and some of the selected economic activities are given below.

Turkey - Industrial Production March 2016

Getting back to the swing of things, we might very well use the 3-month average y/y adjusted IP index growth as a proxy for estimating the GDP changes since two data sets correlate perfectly.

Turkey - Industrial Production vs Real GDP Growth

Given the fact that the reported IP figures for in the first three months of this year were the higher over the past eight quarters, posting another strong set of economic results for 1Q 2016 is smooth sailing for Turkey.

Turkey - Industrial Production vs Real GDP Growth Regression

Based on a GDP growth model on a quite simplistic GDP versus industrial production expansion, we produced calculations that would work well. As seen in the figure above, the model proved to be useful in statistical terms given the respective R square value. The findings hereupon suggest a real GDP growth of 4.3% for 1Q, however, we choose to use another estimation model fed by a number of pre-indicators and predict that Turkish economy will grow by 4.4%.