Production slows; contraction on the horizon


The manufacturing industry has slowed in line with TRY devaluation and rising inflation following the policy rate cuts that began in September 2021. The slowdown has increased as of Q3. The Industrial Production Index (IPI) declined by 13.7% in July, compared to December 2021. The IPI fell by 4.7% in the last three months. Other indicators showed an acceleration in contraction as of August. Nearly 45% of total electricity is consumed by the manufacturing industry. Its electricity consumption declined by 6.1% in July, year-over-year. The decline in consumption in August and September means a decline in consumption for the manufacturing industry. The Manufacturing PMI, which has had a downward course since December 2021 except for the slight hike in August, fell to 46.9 in September, below the threshold of 50 for the seventh consecutive month. The annual hike in exports, which hovered at 30-35% as of Q4 2021, fell below 20% in September. The Export Climate Index fell below the threshold of 50 for the first time since 2013 excluding the COVID-19 restrictions. The Real Sector Confidence Index has been on a downward course since September 2021, and has continued unceasingly since April.

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