In January, Turkey’s Industrial Production fell by 2.3% month-on-month (m/m), after a strong recovery in November and December. Despite the monthly decline, the year-on-year (y/y) growth remained positive at 1.2%. This marks the first decline in industrial production in two months, but a 3-month moving average continues to signal a positive contribution to growth in the first quarter of 2025.
While the seasonally adjusted figures for Industrial Production remained below the historical average, the recovery trend in recent months is significant. All major industrial groups, except for capital goods, showed positive growth on a monthly basis. The durable goods group experienced the highest monthly increase of 2.9%, while the capital goods sector saw a notable 13.1% decline, following a strong 14.7% recovery in December.
The manufacturing sector contracted by 3.0% m/m in January, but showed a modest 1.2% increase y/y. Despite these figures, 11 out of 24 sub-sectors within manufacturing recorded monthly increases. The Mining and Quarrying sector experienced a 7.5% increase for the third consecutive month, while the Electricity, Gas, Steam, and Air Conditioning sector decreased by 0.8%.
Outlook and Economic Growth Forecast
The industrial sector’s contribution to economic growth in the first quarter of 2025 suggests some loss of momentum, following the recovery observed in the final months of 2024. However, 3-month moving averages still indicate that industrial production is expected to positively impact growth in the first quarter.
In 2024, the industrial and manufacturing sectors contributed minimally to the 3.2% overall economic growth, largely due to weak external demand, especially from the Eurozone and Germany. With Germany’s early elections now behind, growth-supportive policies expected in the region may benefit Turkey’s industrial and manufacturing sectors starting mid-2025.
For 2025, growth performance is projected to stay below potential in the first half due to tighter financial conditions, with a gradual recovery expected in the second half, aided by the delayed effects of interest rate cuts. The growth forecast for 2025 remains at 3.2%, with February’s Industrial Production data set to be released on 10 April.