Turkish manufacturing activity hit its lowest level in nine years in September, contracting for the sixth consecutive month, a business survey showed on Monday, reinforcing a bleak economic picture as the country tackles a lira crisis.
The currency has lost some 37 percent of its value against the dollar so far this year over concerns about President Tayyip Erdogan’s grip on monetary policy and a diplomatic rift with the United States.
The lira weakness has driven inflation to its highest level in nearly 15 years and state energy company Botas on Monday raised natural gas prices sharply for the third consecutive month, energy sector sources told Reuters.
The government has responded to the crisis by cutting its growth forecasts for this year and next as a slew of economic indicators point to a sharp slowdown.
The manufacturing Purchasing Managers’ Index (PMI) fell to 42.7 in September from 46.4 a month earlier, remaining under the 50-point line that separates expansion from contraction, a panel from the Istanbul Chamber of Industry and IHS Markit said.
That was the lowest level since March 2009 when the index fell to 37.0, according to IHS Markit.
It said the decline was driven by a slowdown in output and new orders, the panel said, which in turn caused scaling back in employment and purchasing activity.
The lira weakness was central to challenging business conditions and contributed to increasing inflationary pressures, with spike in input and output costs, it said.
“There was little respite for Turkish manufacturers in September as business conditions remained challenging to say the least,” said Andrew Harker, associate director at IHS Markit.
On Monday, state energy company Botas raised natural gas prices by 9 percent for residential users and 18.5 pct for industrial users, energy sector sources said, adding that electricity prices could also rise.
Almost a third of Turkey’s total 293 billion megawatt power production came from natural gas power plants in 2017.
Botas increased gas prices for residential use by 9 percent and by 14 percent for industrial use in both August and September.
Turkish consumer price inflation jumped to 17.9 percent in August, its highest level in nearly 15 years. Istanbul inflation data will be announced on Monday ahead of the release of nationwide data on Wednesday.