Stronger claims for double-digit growth in third quarter

Dünya Executive - - COMMENTARY - Alaatt n AKTAS Economist

It was much easier to predict the GDP growth rate by simply looking at the change in industrial production before the GDP calculatio­ns in the new series. With the new series, based on 2009, this connection is largely ruptured, though of course it is not a total detachment. GDP calculatio­ns were previously based on industrial production determined through surveys, now they are based on administra­tive records that make it somewhat more difficult to make a prediction.

However, one cannot say that the change in industrial production fails to give some idea of growth. Despite being weak, the connection still exists.

Realized industrial production figures released by Turkish Statistica­l Institute (TurkStat) indicate an increase compared with the previous year and support prediction­s of double-digit growth for the third quarter.

According to TurkStat figures, the seasonally adjusted industrial production index rose by 0.6% in comparison with the previous month and seasonally adjusted industrial production rose by 10.4% compared with last September.

According to the raw index with no adjustment­s, industrial production rose by 13.4% in comparison with last September. It’s well known that we use the rate calculated with the unadjusted index “as it doesn’t reflect the real change in production” and that indicates a production increase of 13.4%.

Odds refreshed for double-d g t growth

We did an assessment with a header saying, “Leave all the growth prediction­s aside, there will be double-digit growth in the third quarter.” Even government officials were speaking of a growth rate of only 7% for the third quarter. We had based our prediction­s on the previous year when the economy collapsed after the July 15 failed coup attempt.

Then the expectatio­ns of double-digit growth grew stronger and in the end Prime Minister Binali Yildirim mentioned the possibilit­y of such growth in the third quarter and annual growth of around 7%.

On Sept. 14, we said we were expecting growth of between 10-12% for the third quarter and largely expect a rate closer to 12%, and predict the annual growth rate as 6.5%.

So even though industrial production is not a direct indicator used in the calculatio­n of GDP, the fast increase recorded in July and September significan­tly raises the possibilit­y of double-digit growth.

Industr al product on r ses 13.7% n Q3

Industrial production rose by the record rate of 25.6% in July with the base effect of the previous year’s collapse. With an additional increase of 13.4% in September, the increase in industrial production for the third quarter realized as 13.7%.

Industrial production recorded an increase of 1.7% and 2.1% in the first and second quarters and the production increase for the first nine mounts reached 5.6%. Let me reiterate that this is a record level since 2011.

The 12-month increase in industrial production by September was 4.7%. This is the highest rate for both the first nine months and the last six years.

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