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Analysts at TD Securities note that Turkey’s July IP improved to 5.6% Y/Y from a prior 2.8% (downside revised from 3.2%), showing that some marginal improvement is taking hold in the industrial sector following weak Q2 GDP data.

Key Quotes

“Output growth, however, remains on a slowing trajectory as domestic demand slows and nominal rates move higher. Therefore, we expect weak numbers going forward.”

“In fact, on a worrying note, June unemployment rate jumped to 10.2% from 9.7%, which, based on our adjustments, represents a net deterioration to 10.9% from a prior 10.6% in SA terms.”

“We miss a comprehensive detail of the sectors where the UE rate has deteriorated mostly, but have noticed a sharp drop in the Y/Y growth rate for employment in the categories of services, agriculture & primary activities, and construction (the latter two contracted deeper compared to the prior months when they also posted negative numbers).”

“Also, official figures show that foreigners visiting Turkey have been declining sharply in Y/Y terms both in June and July, but remained positive for both months pointing at still growing tourist flows. This suggests that while tourism is still on the mend, problems must be looked for somewhere else in the economy s the slowdown becomes more entrenched.”

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