Spotlight: Turkey's manufacturing industry functions far below capacity amid COVID-19 outbreak

Source: Xinhua| 2020-04-27 22:10:04|Editor: huaxia

ISTANBUL, April 27 (Xinhua) -- Turkey's manufacturing industry has functioned far below its capacity in April because of the COVID-19 outbreak, which is a clear sign of a looming recession, said Turkish economists.

The manufacturing industry used 61.6 percent of its capacity, with 13.7 points of decline from the previous month, the Turkish Central Bank revealed on Friday.

The most significant decreases were observed in the textile, clothing, automotive, and furniture production, according to the data.

Metin Turkyilmaz, an economy writer of Dunya daily, said the COVID-19 outbreak would severely hit the Turkish economy as several leading economic indicators showed that a deep recession was in the backyard of Turkey.

The Turkish Exporters' Assembly announced that the country's year-on-year exports have plunged by 17.8 percent in March, Turkyilmaz said, describing the figure as a "clear decline" in the economy.

"Tourism has stopped because of the pandemic, and no improvement is expected in the coming months," Turkyilmaz told Xinhua, noting it would put Turkey in a difficult position in terms of losing revenues.

"In March, fuel consumption decreased by up to 70 percent, which cannot be explained simply by the fact that people do not go out. It means that the shipping industry has also stopped as there was no trade," he added.

Additionally, Turkey's budget saw a record deficit of 43.7 billion liras (6.2 billion U.S. dollars) in March, up from 7.4 billion liras in February.

"All these were strong signs of a recession in the economy," the Turkish economist pointed out.

Orhan Karaca, an academic with Istanbul Kultur University, said the deterioration of the use of the capacity is now more or less similar to what happened during the 2008-2009 global crisis.

"Service sectors should probably be in a much worse situation," he said in a tweet.

The global economic crisis significantly affected Turkey at the end of 2008, forcing the Turkish economy to shrink by 4.7 percent in 2009 and the capacity utilization rate to decrease to 60.8 percent.

Murat Tufan, an analyst with the broadcaster Ekoturk, said Turkey started to see the impacts of the virus on the real sector.

"There is a significant decrease in the capacity since stores and shopping malls are closed across the country as part of government measures to contain the spread of the coronavirus, and people do not prefer to buy luxury goods," Tufan told Xinhua.

In Tufan's view, the recovery would be possible toward the end of the second half of this year if there wouldn't be a second wave in the outbreak.

"The capacity utilization rate may approach 65 percent in May," he noted. "But, the level we rely on is 75 percent. Unless the capacity reaches that percentage, we cannot say it is over."

Turkey's economy may shrink five percent at the end of 2020 and the unemployment rate may rise to 17.2 percent, according to a recent report of the International Monetary Fund. Enditem