Automotive Exports March 2021

•Among the two hit hardest by the
outbreak, service sectors dropped by 4.3%
and the construction industry was down
3.5%.
•The expansion was also driven by a rise
in household consumption, estimated
to account for about two-thirds of the
economy, which jumped 8% year-on-year.
•Gross fixed capital formation, a measure
of investment by businesses, was up an
annual 10.3%. Government spending
increased 6.6%, its largest annual gain since
the first quarter of 2019.
•Turkey’s GDP in current prices dropped to
some $717.1 billion last year, down from
$760.8 billion, the data showed.
•The GDP per capita fell to $8,599 last year
from $9,127 in 2019. It was $10,597 in
2017.
•The economy registered a growth of 6.3%
in the third quarter of last year after a
contraction of 10.3% in the second quarter
as the coronavirus’s impact started to be
felt in earnest. The GDP had expanded
4.5% in the first quarter. An infographic
showing Turkey’s quarterly GDP growth.
(By Ayla Coşkun / Daily Sabah)
Faced with a second COVID-19 wave, the
government imposed new measures at
the end of last year but sought to free up
supply and production chains.
Ankara is considering lifting some of the
latest virus restrictions as of this month.
President Recep Tayyip Erdoğan was due
to announce gradual normalization steps
following the Cabinet meeting in the capital
Ankara.
Analysts say the economy should expand
by roughly 5% this year despite the tight
monetary policy.The Central Bank of the
Republic of Turkey (CBRT), which has
repeatedly said it would target inflation
more strongly under new Governor Naci
Ağbal, has raised its policy rate by 675
basis points to 17% since November to
cool inflation. Credit has dropped off
dramatically ever since. The benchmark
rate was held steady in January and
February meetings. Inflation is expected to
have risen to more than 15% last month,
polls showed as fruit and vegetable prices
continue to exert upward pressure. It
edged higher to stand at 14.97% in January.
Ensuring price stability is Turkey’s main
priority in 2021, Minister Elvan said.
“Our policies fighting inflation will pave
the way for more qualified and sustainable
investment, production and growth,” he
stated.
The central bank expects inflation to come
down to 9.4% by the end of 2021. However,
it said changes of weightings in the
inflation basket will have an upside impact
on annual inflation until mid-2021.
The central bank said the changes were
projected to increase inflation by 0.5 points
by April, then die out toward the end of the
year.
A separate data showed that Turkish
factory activity grew at a slower pace in
February as new orders contracted slightly,
although manufacturers continued to
expand production and add staff.
The Purchasing Managers’ Index (PMI) for
the manufacturing sector fell to 51.7 in
February from 54.4 a month earlier, data
from the Istanbul Chamber of Industry
(ISO) and IHS Markit showed, staying above
the 50 mark that separates expansion from
contraction.
Signs of improvements in demand led
manufacturers to expand production
despite a slowdown in new business and
issues with the supply of raw materials.
Higher output and planned new production
lines led firms to take on more staff, the
panel said, extending the current sequence
of job creation to nine months.
Input costs and output prices continued
to rise but at a slower pace mainly due
to higher raw material costs, with a
strengthening of the lira helping lead to
softer inflationary pressures.
“Although there were signs of softening
new order inflows in February, the overall
Turkey PMI remained in positive territory
as firms shrugged off a pause in new order
growth and continued to raise production
and employment,” said Andrew Harker,
economics director at IHS Markit.
“There was also good news on the inflation
front. Although supply issues are causing
higher raw material prices globally, an
appreciation of the Turkish lira has helped
to mitigate these pressures,” Harker
concluded.
March 2021
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