After the rapid rise in October, industrial production increased at a limited rate in November. On the other hand, capacity utilization rate increased considerably in December. These data do not give any new information as to what extent the growth estimations for 2010, which generally vary between 4 percent and 5 percent and sometimes go beyond 5 percent, are realistic. This interval of growth estimate seems as realistic as it was a couple of months ago.
Capacity utilization rate of November went up by five points compared to the same period in 2008. However, we should be cautious in assessing the extent to which this will translate in December industrial production. For instance, in October, again compared to October 2008, capacity utilization rate decreased by five points whereas industrial production rose. In a previous commentary, I argued that this resulted from the method of calculation used for capacity utilization series. Therefore, we must not 'read' the changes in capacity utilization rate alone. This is an unfortunate situation for commentators. After all, there is an apparent rise in capacity utilization but you cannot be sure about the meaning it has to imply.
Industrial production, net of the changes in the size of labor force and seasonal effects, increased by 0.2 percent compared to the month before. TURKSTAT now announces net data along raw data. This way, it becomes easier for us to make out how much production loss was encountered due to the crisis, whether we started to offset this loss and if we did what proportion of this loss has been offset.
I can depress you for now as I will say optimistic things in the following paragraph: From the peak of industrial production in March 2008 to the trough of industrial production in March 2009, production decreased by 18.5 percent. Since the trough, there appears an almost uninterrupted recovery. Nonetheless, despite this, the current level of production is almost equal to the level achieved four years ago. We produce at the March 2006 level! Therefore, we still suffer production loss in comparison with the peak level and this loss is quite significant: 11 percent production loss in 11 months. This is what crises are like; it makes you travel reversely in time, you go back to the past.
Although if we are not sure what capacity utilization rate implies considering production in December; export growth enjoyed in December gives us a hint: As data announced by TİM (Turkish Exporters' Assembly) indicates, exports rose by 32 percent compared to the same period last year. We have to take into account that exports in December 2008 were quite low and avoid attributing this rise solely to the 'basis effect' since exports in December 2009 is even above the level in December 2007. This corresponds to 1 percent rise.
As daily data suggests, over the first eleven days of January, exports increased even slightly compared to the same period last year. It is of importance to what extent these rises enjoyed recently will turn into a prominent upward trend. The main factor behind the 2010 growth will be the recovery in global economies rather than the steps we took (or we are to take). And we expected that the first implication of this would be in form of a rise in exports. Let us hope that it will be so.
This commentary was published in Radikal daily on 14.01.2010
