Turkey: January manufacturing confidence rises to 109.5


In the January real sector confidence index data announced by the Central Bank, it is seen that a strong start was made to 2022 after a slight slowdown in 4Q21. In this context, we observe that the current index level continues to remain above the pandemic. While RSCI increased by 3.4 points to 109.5 in January; The seasonally adjusted RSCI, on the other hand, increased by 1.8 points to 111.9.


In this period, the manufacturing industry capacity utilization rate decreased by 1.1 points to 77.6%; The seasonally adjusted CUR, on the other hand, was 78%.


When the diffusion indices of the survey questions that make up the index are examined, the general trend, the total order amount in the last three months, the production volume in the next three months, the total employment in the next three months, the fixed capital investment expenditure, the export order amount in the next three months and the evaluation index for the current product stock have increased. Evaluations regarding the current total order quantity, on the other hand, affected the index in a decreasing direction.


We observe partial recession effects in total orders and export orders. As is known, the export outlook was positive throughout 2021, reflecting the increasing strength of foreign demand. On the other hand, we observe that the flash PMIs, one of the leading growth indicators of the Euro Zone, which has a decisive position in the axis of foreign demand, gave a mixed outlook for January during the week. In the coming period, we see the status of energy shipments as determinant in terms of variant developments, supply chain disruptions and geopolitical developments. The preservation of the current strong levels in fixed capital expenditures points to a positive outlook in terms of industrial activity capacity. Against this; With the risks regarding the external demand outlook on the exporting sectors’ side, by the beginning of 2022, there may be a more limited outlook or partial regression within the framework of last year’s comparison. January manufacturing PMI, one of the first industry leading indicators of 2022, will also be released next week. PMI, which was announced as 52.1 in December, has been in the growth zone since June 2020, excluding May 2021 (closing effect), above 50 basis value. We see the energy cuts in the last days at a point that restricts the activity and production on the industry. It will be necessary to evaluate the general activity effect and the effects on the supply of goods according to the duration and size of the interruption, as its periodic effects may cause a serious slowdown in production.


At the price collection point; The determining feature of the exchange rate continues. It is desired to balance this situation with the measures taken to limit the rise in exchange rates since the end of December. On the other hand, in order to keep domestic consumption at an autonomous level, we think that the increase in real wages may cause an increase in the prices of products sold. We consider that together with the new economy perspective and the financial conditions that are desired to be relaxed, we will stay on the expansionist side with the financial policy support implemented by the central government. In the general growth profile, we will be following the reinforcement elements in the direction of central government expenditure and credit promotion in 2022. In an inflationary environment, shocks that may occur due to foreign demand within the framework of domestic demand, geopolitical and financial developments, and the interest rates originating from the market/banking system point to much tighter conditions than a real financial easing effect, which poses downside risks to growth.


When we evaluate all these conditions in general; We calculate that we have achieved 10.8% growth in double digits for the whole of 2021. Our growth expectation for 2022 is at the level of 4.2% under current conditions.

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