The Turkish lira is trying to rebound from its record low in July against the US dollar, posting mixed economic data to kick off the trading week. The lira has weakened amid inflation fears and the central bank leaving interest rates unchanged for the last several months. With the country facing thousands of protesters due to new COVID-19 restrictions, will the economy slump?
According to the Turkish Statistical Institute (TSI), industrial production advanced at an annualized rate of 8.7% in July, falling short of market forecasts of 15.1%. Industrial output, which slowed during the dog days of summer, recorded softer growth for intermediate goods, durable consumer goods, non-durable consumer goods, and energy.
On a monthly basis, industrial production contracted 4.2%, down from the 2.2% increase in June.
Retail sales surged 12.3% year-over-year in July, the smallest monthly gain since February. Ankara posted slower sales for food, non-food products, and automotive fuel. The biggest takeaway from the TSI retail trade snapshot was the boom in ecommerce, soaring 46.1%.
On a month-over-month basis, retail sales rose 0.7%.
The current account deficit fell to $683 million, slightly higher than the median estimate of $570 million.
Last week, it was reported that the unemployment rate increased to 12% in July, up from the 10.6% in June. The labor force participation rate edged up to 51.2% in July, up from 50.3% in the previous month.
Turkey has experienced a resurgence of coronavirus infections, with the seven-day average nearing 23,000. Close to two-thirds of the population have received both doses of the vaccine. But the federal government has instituted COVID-related restrictions, requiring proof of vaccination or negative test results to take public transit and enter concerts and theaters. Mask mandates and social distancing are also being implemented.
This has resulted in thousands of demonstrators protesting against the wide variety of public health restrictions. Indeed, Turkey joins the growing list of nations, such as France, Germany, the Netherlands, Greece, and others that are seeing widespread demonstrations against similar COVID measures.
The USD/TRY currency pair fell 0.25% to 8.4482, from an opening of 8.4695, at 13:17 GMT on Monday. The EUR/TRY tumbled 0.44% to 9.9588, from an opening of 10.0038.