Automotive Exports August 2023

Turkish factory activity expands at steady pace in June
Factory activity in Türkiye expanded at
a steady pace in June, a closely watched
survey showed, although new orders
growth slowed and price pressures grew as
the currency weakened.
The Purchasing Managers’ Index (PMI) for
manufacturing came in at 51.5 in June,
unchanged from the previous two months,
staying above the 50-point line that
separates expansion from contraction, the
Istanbul Chamber of Industry (ISO) and S&P
Global said.
Output was up for the fourth month
running, the survey showed, with the rate
of growth being the fastest since July 2021.
Alongside improving demand, firms also
attributed the rise to the ongoing recovery
from February’s major earthquakes and
a pick-up in activity following the Turkish
election.
“Manufacturing production kicked on
nicely in June, and the goods-producing
sector as a whole finished the first half
of the year in broadly positive shape as
demand improved further,” said Andrew
Harker, Economics Director at S&P Global
Market Intelligence.
“Firms were battling the familiar foe of
currency weakness, however, which limited
new order growth and brought an abrupt
halt to the recent easing of inflationary
pressures,” Harker added. The Turkish lira
has declined 28% so far this year, largely
after the economic authorities took steps
since President Recep Tayyip Erdoğan was
reelected on May 28, including changing
course after two years of monetary easing.
As part of the policy pivot, the country’s
central bank increased its benchmark
policy rate by 650 basis points, lifting its
one-week repo rate to 15%. The monetary
authority has also simplified some of
the macroprudential measures it had
implemented in a drive to boost the lira.
The survey showed input cost inflation for
factories accelerated sharply in June and
was the most pronounced since July last
year, with respondents citing unfavorable
exchange rate movements as the main cause.
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