Industrial output falls 1.4% in June as the factory slowdown bites into growth

Industrial production in Türkiye contracted by 1.4% in June compared with the previous period. Weakness in the manufacturing sector was the decisive factor behind the decline.

Industrial production is regarded as one of the most closely watched leading indicators of the growth outlook. The June reading points to subdued activity across the second quarter.

The picture on the production side is being read alongside the pass-through of domestic demand and cost pressures to the real economy at a time when monetary policy is maintaining a tight stance.

MHA Analysis

Because industrial production leads growth, the June reading sets the tone for the second quarter. The tension it exposes is this: manufacturing contracting while policy stays tight means the cost of disinflation is being paid on the production side. That equation is not sustainable — either domestic demand recovers next quarter, or the duration of the tight stance comes up for debate.