Rebalancing and Rebounding Process Continue in The Turkish Economy

The Turkish economy is continuing its rebalancing, rebounding on the back of industrial production, which expanded for the third consecutive month through March. Capacity utilization rate in manufacturing reached 75 percent in April, while employment generated 68,000 new jobs in February and retail sales rose for the third consecutive month through March.

In March, industrial production in Turkey was up 2.1 percent compared to the previous month. It is seen that the signs of recovery that have been observed for a while and more clearly in February, continued gaining strength in March.

In line with the strong positive changes on the monthly basis of the industrial production series and the decrease in the contraction momentum on the yearly basis, Turkey is eyeing continuing improvement in industrial production for the rest of 2019.

On April 30, the Central Bank of the Republic of Turkey (CBRT) announced the Inflation Report 2019-II. CBRT kept inflation forecast at 14.6 percent (midpoint 14.6 percent, 12.1 percent - 17.1 percent forecast range) and 8.2 percent (5.1 percent - 11.3 percent range, with a midpoint of 8.2 percent) for 2019 and 2020 respectively. The CBRT's 2019 average estimate for oil prices rose from USD 63.1 to USD 67.2 per barrel.

Turkey's current account deficit in March amounted to USD 590 million against a market expectation of USD 1 billion, while the annualized current account deficit decreased to USD 12.83 billion in March.

On the financing side, Turkey saw an FDI inflow of USD 1.14 billion in March 2019. Comparative analysis of FDI figures can be found in the chart below.

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