Turkish October industrial output falls 5.7 percent year-on-year


ISTANBUL (Reuters) – Turkish industrial production fell by a bigger-than-expected 5.7 percent year-on-year in October, official data showed on Monday, illustrating the sharp economic downturn after a currency crisis earlier this year.

A sell-off in the lira <TRYTOM=D3> – the currency fell as much as 47 percent this year – has sent inflation to its highest in a decade and half and cast doubt on the ability of Turkish companies to pay back an estimated $146 billion in external debt maturing in the year to July 2019.

Industrial production fell a calendar-adjusted 5.7 percent year-on-year in October, the data from Turkish Statistical Institute showed. That compared to a forecast for a 4 percent decline in a Reuters poll of six economists.

“The weaker-than-expected Turkish industrial production data for October suggest that, after contracting in Q3, the economy has probably entered a technical recession in Q4,” said Jason Tuvey of Capital Economics said in a note to clients.

“Weak economic growth, coupled with last month’s fall in inflation and the recovery in the lira, means that the central bank is likely to push ahead with rate cuts at the start of next year.”

The lira was at 5.3911 at 0828 GMT, weakening from Friday’s close of 5.3600.

Turkey saw its worst economic performance in two years in the third quarter, as economic growth dwindled to 1.6 percent, hit by the currency crisis, soaring inflation and higher interest rates.

Month-on-month, industrial production was down 1.9 percent in October on a calendar and seasonally adjusted basis, the data showed.

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