Turkish manufacturing takes hit due to coronavirus pandemic

ANKARA - Turkish manufacturing slumped heavily in March due to the impact of the coronavirus pandemic as the lira slides to its lowest levels since the 2018 currency crisis.

February saw Turkish industrialists enjoy the fastest improvement in business conditions in two years but the latest figures showed that the headline Istanbul Chamber of Industry Turkey Manufacturing PMI index dropped from 52.4 to 48.1, with any figure below 50 points considered contraction.

“The COVID-19 pandemic comes at a time when the Turkish manufacturing sector was building good growth momentum, and is therefore a bitter blow for firms,” said Andrew Harker, economics director at IHS Markit, which helps prepare the monthly survey.

“Output and new orders slowed sharply, with the global nature of the outbreak hitting exports and supply chains hard.”

The lira weakened some 0.6% to 6.6570 against the dollar, its lowest level since September 2018, when a currency crisis briefly halved its value and tipped the economy into recession. It had closed at 6.6175 on Tuesday.

The country’s central bank announced further monetary easing measures on Tuesday and the government is implementing a 100 billion-lira ($15-billion) package of financial measures to help keep the economy on its feet.

The impact on the delivery of purchased products has been heavy, with suppliers’ delivery times lengthening to the second-greatest extent since the survey began in June 2005, IHS Markit and the Istanbul Chamber of Industry said.

Input cost inflation was also marked due to the weakness of the lira and supply shortages, leading manufacturers to raise their own prices.

The rate of price inflation was the steepest in almost a year and a half, according to the survey’s findings.

Turkish business groups are calling on the government to make more cash available to help struggling firms and employees. But Turkey’s financial options are limited. The government spent billions of dollars to help stimulate economic recovery during 2019 after a currency crisis erupted the year before.

Pressure has been growing on the government from opposition politicians and the Turkish Medical Association to implement a full lockdown. But so far President Recep Tayyip Erdogan has insisted that he will ‘keep the wheels turning’ to maintain the economy.

Ankara has halted international flights, limited domestic travel and closed schools, bars and cafes but people are yet to be stopped from leaving their homes as the number of cases continues to rise sharply.