Turkey: Capacity utilisation rate retraces from a two-year high in November

Turkey: Capacity utilisation rate retraces from a two-year high in November
Emre Tekmen - Market Economics | 26 Nov 2013

Seasonally adjusted capacity utilisation rate fell 0.8pp to 74.9% in November, paring back last month’s increase of similar amount. As a result, capacity utilisation rate is now back at its June-September average, down from a two-year high of 75.7% in October. The decline in the capacity utilisation rate was mainly driven by intermediate goods production, namely manufacture of chemicals and plastics. Capacity utilisation rate in non-metallic mineral production, a strong proxy for construction sector, declined 1.5pp and trimmed the 2.5pp increase in October. Among export-oriented sectors, manufacture of textiles and basic metals were broadly flat whereas capacity utilisation rate in automotive production fell for the third consecutive month.

Turkey: C/A deficit deteriorates further

Turkey: C/A deficit deteriorates further
Emre Tekmen - Market Economics | 13 Nov 2013 10:54

At USD 3.3bn, September's current account deficit was higher than the market’s expectations (USD 2.7bn) and our above-consensus forecast (USD 3.0bn). In addition, January-August current account deficit was revised up by a total of USD 1.4bn, mainly due to lower tourism revenues. As a result, 12-month cumulative c/a deficit reached USD 59.1bn in September, from USD 58.5bn in August. Non-energy current account deficit also widened by USD 0.8bn to USD 9.3bn, on a 12-month cumulative basis. Turkey was a net gold importer in September as well, contrary to last year, and 12-month cumulative net gold imports reached a record high of USD 7.3bn. At the same time, we also note that seasonally adjusted current account deficit excluding gold and energy has been widening gradually since the start of the year.

Turkey: Gradual recovery in IP

Turkey: Gradual recovery in IP

At 1.6% y/y, February’s industrial production (IP) index was slightly below the market consensus and our expectation of 2%. On a seasonally and calendar adjusted basis, IP increased by 1.5% m/m, following a rise of 2.4% m/m in January and offset the 3.5% m/m contraction in December. The weaker-than-expected IP data in February hint that the economic recovery is likely to be gradual and slower than envisaged, despite the CBRT’s monetary easing. Yet, we expect the pickup in the manufacturing activity to become more visible in Q2, as suggested by the strong pace of credit growth and above 50 PMI readings.

Central of Bank Turkey: Surprise cut on the ceiling rate

Central of Bank Turkey: Surprise cut on the ceiling rate

The CBRT kept its policy rate and the lower-end of the interest rate corridor unchanged at 5.50% and 4.50% respectively, but unexpectedly cut the ceiling rate by 100bps. Accordingly, o/n lending rate to primary dealers was reduced to 7.00% (the rest of the market to 7.50%). In addition, reserve option coefficients were raised by 0.1 points for the upper tranches, which would increase gross reserves by USD 0.9bn.

Turkey May Block Use of Natural Gas for Cyprus Bailout

Turkey May Block Use of Natural Gas for Cyprus Bailout

Published: Thursday, 21 Mar 2013 | 3:13 PM ET

Turkey could challenge any move by Cyprus to speed up offshore natural gas exploration as a way of attracting desperately needed investment to save its teetering economy, senior Turkish officials said Thursday.

http://www.cnbc.com/id/100579091

Turkey: December unemployment rate

Turkey: December unemployment rate

Temporary rise in the unemployment rate

In December, seasonally adjusted unemployment rate increased 0.1pp to 9.6%, and non-farm unemployment rate increased 0.2pp to 11.8%, on our calculations. The employment and participation rates remained strong at 46.0% and 50.9% respectively, only a tad below the record high levels of 46.1% and 51.0% in November.

Turkey: Strong increase in fiscal revenues and spending in February

Turkey: Strong increase in fiscal revenues and spending in February

Central government primary balance was TRY 3.5bn in February, significantly lower compared to the surplus of TRY 6.0bn in February 2012. The deterioration in the fiscal balance came despite stronger budget revenues, which increased 18% y/y. On the other hand, non-interest expenditures rose much faster by 34% y/y. The additional spending in February stems from payments to contractors and transfers to social security institution.

Turkey: The end of rebalancing

Turkey: The end of rebalancing

At USD 5.6bn, January's current account deficit was slightly higher than the market consensus and our forecast (both at USD 5.3bn). Consequently, 12-month cumulative c/a deficit declined USD 0.1bn to USD 46.8bn. Non-energy current account balance remained unchanged at USD 5.5bn on a 12-month cumulative basis. The revision of Turkstat's tourism revenue estimations was reflected to BoP statistics, and as a result, 2012 c/a deficit was revised down to USD 46.9bn from USD 48.9bn, or 5.9% of GDP. Net errors and omissions were revised from USD 4bn to USD 2bn for 2012.

Turkey: Signs of Life in IP

Turkey: Signs of Life in IP

January's industrial production was 2.1% y/y, slightly below the market and our expectations of 2.5%. On a seasonally and calendar adjusted basis, IP increased by 2.3% m/m, following a decline of 3.5% m/m in December. January industrial production index shows that CBRT's monetary easing has started to reflect on manufacturing activity. Strong January IP figure combined with robust credit growth, confidence indices and PMI, points that the pickup in the economic activity will continue in Q1.

Turkey: Inflation - as expected

Turkey: Inflation - as expected

At 0.3% m/m, February's CPI inflation was slightly below the market consensus and our forecast (both at 0.4% m/m). Consequently, annual inflation declined 0.3pp to 7.0%. The lower-than-expected CPI was mainly due to food and clothing prices. Annual food inflation fell from 6.85% in January to 5.60% in February, partly correcting the 3pp rise previous month. The decline in clothing prices was higher than the seasonal averages at 6.4% m/m in February.

Turkey: Gold export story reaches an end

Turkey: Gold export story reaches an end

At USD 7.3 bn, January’s foreign trade deficit was slightly above the market expectations (USD 7.0bn). As a result, 12-month cumulative trade deficit increased to USD 84.2bn in January from USD 84.0bn in December. Similarly, 12-month cumulative non-energy trade deficit increased to USD 31.9bn from USD 31.6bn. On a seasonally adjusted basis, exports and imports increased by 2% m/m and 9% m/m, respectively. Imports excluding gold and energy rose by 6% m/m on a seasonally adjusted basis, according to our calculations. On a 3m/3m basis, imports increased for the first time since August 2012, signalling that the monetary easing of the CBRT has finally reflected on import figures. Based on broad economic categories, imports of consumption goods increased 7.6% y/y, intermediate goods by 3.4% y/y, and capital goods by 8.2% y/y.

Turkey: Inflation outlook left unchanged

Turkey: Inflation outlook left unchanged

The CBRT left its end-2013 inflation forecast unchanged at 5.3%, with a 70%-probability forecast range of 3.9-6.7%. CPI inflation is forecast to slip to 4.9% by end 2014 (with a 70%-probability forecast range of 3.1-6.7%). The official inflation target was kept at 5% for both years. The CBRT sees annual inflation rising in January on the back of tobacco tax hikes and resuming a downward trend thereafter. Core inflation is forecast to maintain its downward trend and fall below 5% by year end.

Turkey: Capacity Utilisation

Turkey: Capacity Utilisation

Correction of the December Data Resulted in a m/m Decline in the CUR

On a seasonally adjusted basis, capacity utilisation rate (CUR) decreased 0.5pp m/m to 73.1% in January. Unadjusted CUR decreased 1.2pp m/m to 72.4%. On our calculations, both consumer goods and durable goods production increased by 0.7 pp m/m on a s.a. basis. On the other hand intermediate and investment goods production declined by -1.4 pp m/m and -0.8 pp m/m, respectively, partly counterbalancing the sharp rise they displayed last month. Among the export market oriented sectors, CUR in motor vehicles declined 1.0 pp m/m, while basic metals production dropped 1.7pp m/m. However CUR in textile sector remained strong and increased 1.3pp m/m.

Turkey: Unemployment rate declined despite the record high participation rate

Turkey: Unemployment rate declined despite the record high participation rate

In October, unemployment rate remained unchanged at 9.1% while non-farm unemployment rate decreased 0.2pp to 11.4%. On a seasonally adjusted basis, unemployment rate decreased to 9.3% from 9.4% in September and non-farm unemployment rate declined 0.3pp to 11.7%. The unemployment rate declined in spite of the new record high participation rate which increased to 50.7% from 50.3% in September.

Turkey: The narrowing in the current account deficit has neared to an end

Turkey: The narrowing in the current account deficit has neared to an end

At USD 4.5bn, November's current account deficit was lower than the market consensus and our forecast (USD 4.8bn). Consequently, 12-month cumulative current account deficit declined to USD 51.9bn, from USD 52.8bn in October. Non-energy current account balance on a 12-month cumulative basis turned into a surplus of USD 0.4bn, from a deficit of USD 0.8bn in October. 12-month cumulative net gold exports increased to USD 5.6bn, from USD 5.2bn in October, and continued to contribute to the narrowing in the current account deficit.

Turkey: IP Recovers Strongly

Turkey: IP Recovers Strongly

At 11.3% y/y, November’s industrial production index was above the market consensus (%9.9) but below our more optimistic forecast (13.5%). On a seasonally adjusted basis, industrial production increased by 1.5% m/m in November, following a 2.6% m/m decline in October. The decline in October was mainly due to the working day and holiday effects.

Turkey: No surprises on c/a deficit

Turkey: No surprises on c/a deficit

At USD 1.96bn, current account deficit was slightly below the market consensus (USD 2.1bn) and our forecast (USD 2.0bn) in October. As a result, 12-month cumulative current account deficit declined to USD 53.1bn from USD 55.7bn in September. Similarly, 12-month cumulative non-energy current account deficit fell to USD 1.4bn, from USD 3.9bn. Net gold exports continued to support the narrowing in the current account deficit. 12-month cumulative net gold exports amounted to USD 5.2bn, from USD 3.7bn in September. Current account deficit, excluding gold and energy also continued to improve, partly reflecting the holiday effect in October.

Turkey: GDP Surprises on the Downside

Turkey: GDP Surprises on the Downside

At 1.6% y/y, Q3 GDP growth was weaker than the expectations (2.6% y/y) and our forecast (3.2% y/y). On a seasonally adjusted basis GDP grew by 0.2% q/q in Q3, broadly in line with our expectation. The downward surprise in the headline growth number was mostly on the back of weaker-than-expected private investment and exports. The contribution of private sector investment was -2.2pp to growth. The expansion in exports slowed down to 11.9% y/y in Q3 from 20.9% y/y in Q2, still the contribution of foreign demand was 3.4pp. Consumption of households subtracted 0.4pp from growth whereas public sector spending contributed 0.8pp to growth. At the same time, Q1 GDP growth was revised to 3.4% from 3.3%, and Q2 GDP growth to 3% from 2.9%.

Turkey: Still in a sweet spot

Commerzbank Corporates & Markets
Emerging Markets
https://research.commerzbank.com

Turkey: Still in a sweet spot

Following our October visit, we wrote that the Turkish economy had entered a sweet spot – that slower growth and low commodity prices were having a materially positive impact on Turkey’s current account and inflation imbalances. Last month, current account and inflation data improved further. Meanwhile, Fitch upgraded Turkey to investment grade – the only such upgrade in the region since Lehman. Moody’s holds a positive outlook. Understandably, foreign capital is piling in.

Analyst:
Tatha Ghose

Turkey: Food-Driven Disinflation

Turkey: Food-Driven Disinflation

At 0.38% m/m, November's CPI inflation was significantly lower than market consensus and our expectation (0.9%), mostly due to a 0.12% m/m decline in food prices. Contrary to the global food price increases during the first half of the year, domestic food prices followed a subdued trend this year, resulting in a food inflation of 2.3% from January to November. The average January-November food inflation during 2007-2011 was 10%. Accordingly, annual CPI inflation declined to 6.4% in November from 7.8% in October.