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between contractions and expansions). “Anecdotal evidence from survey respondents indicated that the depreciation in the Turkish lira affected the manufacturing sector during the month,” IHS said. However, it should be noted that the government has lately launched fresh stimulus packages ahead of the Istanbul revote to be held on June 23. The seasonally and calendar-adjusted industrial production index fell back to negative territory in April after posting consecutive growth readings for a three-month period. It was down 1% m/m in April. The economic contraction triggered by the currency crisis that hit Turkey’s debt-fuelled economy last summer has hit consumer demand hard. For instance, lower demand drove the country’s auto production down by 12% in January to May. On June 14, Moody’s Investors Service cut Turkey’s sovereign rating deeper into junk, saying the downgrade reflected its view that the risk of another Turkish balance of payments crisis, following on from the turmoil seen last summer, continued to rise, and with it the risk of a government default. Turkey is structurally highly reliant on external capital flows, and Moody's confidence in its ability to continue to attract the large sums needed each year to repay debt and sustain growth is waning.
Amid the economic turmoil, many sound companies with good prospects on Turkey’s relatively young and big population of around 81mn people are struggling with debt repayments, meaning foreign investors looking to do some cheap M&A business are increasingly circling some prime targets.
4.2 Inflation
25 TURKEY Country Report July 2019 www.intellinews.com