Turkish Output Probably Slumped for Ninth Month: Week Ahead

By Steve Bryant

June 8 (Bloomberg) -- Turkish industrial output probably fell in April for the ninth consecutive month as the global economic crisis slashed demand at home and abroad, driving the country into recession, a survey showed.

Output slid 18 percent from the year earlier, according to the median estimate of 10 economists surveyed by Bloomberg, following a decline of 20.9 percent in March. The statistics office in Ankara will announce the figures at 10 a.m. today.

While the pace of decline is slowing, it still points to a third consecutive quarter of economic contraction after gross domestic product fell 6.2 percent in the last quarter of 2008. The economy probably shrank more than 10 percent in the first three months of this year, according to central bank forecasts.

“It may be the smallest decline this year,” said Inan Demir, an economist at Finansbank AS in Istanbul. “Nevertheless, it’s going to remain negative until November or December and even then when we see positive figures they’re going to be very small.”

The central bank has cut its benchmark interest rate by 7.5 percentage points in the past seven months, taking it to a record low of 9.25 percent. Industrial output fell by an average of 22 percent in the first three months of the year and central bank Governor Durmus Yilmaz said on June 4 that he expected the decline to “stabilize” in the second quarter.

Exports fell 33 percent in March from a year earlier to $7.6 billion, the sharpest decline since at least 1985.

Capacity Utilization

The statistics agency will also release capacity utilization data for May on June 10. Capacity usage increased in April from a month earlier, helped by sales tax cuts on new cars the government introduced to help spur demand and protect jobs.

The central bank will report April’s current account, the widest measure of trade in goods and services, on June 10. The current-account deficit has been narrowing as consumer demand for imported goods falls and the price of oil declines.

The benchmark stock index fell 0.7 percent last week to 34,750.19. The lira weakened to 1.5432 to the dollar at 5:13 p.m. in Istanbul on June 5 from 1.5332 a week earlier. The yield on the benchmark lira bond tracked by ABN Amro rose to 12.91 percent from 12.39 percent.

The following is a list of important events in Turkey next week:

Event                                                  Date
Industrial output data                                 June 8
Capacity utilization data                              June 10
Current-account figures                                June 10

To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net.