Turkey’s March output soars, boosting GNP growth hopes

ANKARA – Turkish industrial output soared an annualized 18.7 percent in March, data showed yesterday, boosting hopes that the country, battling to overcome a financial crisis, will achieve the 2002 growth target agreed with the IMF. Financial markets rallied on news of the climb, although many analysts cautioned that it could be a one-off surge sparked by stock-building. A Reuters poll of 12 economists this week had forecast an average 4.3-percent rise against March 2001 data. «It indicates how prematurely those who said there couldn’t be (end-2002) growth of 2.5-3 percent acted,» said Pelin Yenigun, an economist at Global Securities in Istanbul. The International Monetary Fund, which has reached a three-year, $16 billion loan package deal with Turkey, has set a 3-percent growth target for this year after a deep recession in 2001. The stock index closed the day up 3.96 percent at 12,117.17 points, after falling earlier in the morning, but the lira reversed an earlier rise to close unchanged, at 1,376,000 to the dollar on the interbank market. Stock-building suspected Analysts said they were keen to see the detailed breakdown of the preliminary headline figure from the State Statistics Institute. Many pointed to stock-building as being behind the sharp rise and warned that rate was unlikely to last through the year. «The extent of the rise also suggests firms are starting to build inventories in response to an expected pickup in demand,» wrote Lehman Brothers Global Economics in a research note. «We do not expect the stellar performance seen in March to continue. Part of the explanation might have been a build-up in inventories… and is likely to prove temporary,» it said. Some growth had been widely expected, if only because the data came a year after the February financial crisis sparked a 7.6-percent fall in output during March 2001. «The most important factor in this is a very positive base effect. For instance, last year there were 17 working days; this year that rose to 21 days. Plus last year all the impact of the crisis was in March and that gives a base effect,» said Erol Danis, economist at Finansinvest. «But this 18.7-percent figure is well above that. Some of it could be stock-building but it’s still very positive. I hope they don’t revise it,» he added. Turkish GNP fell 9.4 percent in 2001 and it is striving to manage a heavy post-crisis debt burden. The government is also pursuing a year-end inflation target of 35 percent, down from 52.7 percent in April. Manufacturing sector output rose 20.5 percent in March, metals sector output 6.1 percent and the utilities sector 11 percent year-on-year.