Data neutral for Lira
Turkish industrial production increased by 4% year-on-year in January, while seasonal and workday adjusted output increased by 1.3% month on month basis. We view the data as neutral for the lira. We assume a strong 1% quarter-on-quarter GDP increase in Q1 2017 followed by 0.8% q/q again in Q2. But even such a quarterly profile would yield just 1% full-year GDP growth for 2017. We expect USD/TRY to remain in the 3.75 range over the coming quarter assuming that Central Bank of Turkey will maintain effective market interest rates near 11%.