Reports on "Overview and Expectations in Turkish and Istanbul Industry" is Issued

• 18.04.2018
• News

Istanbul Chamber of Industry (ICI) issued reports on "Overview and Expectations in Turkish and Istanbul Industry" that happened to be the first research including expectations regarding the next 12 months in the manufacturing industry, the driving force of the economic growth. In the research conducted by interviewing 400 industrial firms in March with the cooperation of ICI and IHS Markit, the ratings over 0.0 are accepted to be positive and the ones below are accepted to be negative.

According to the first one of these ICI reports titled "Overview and Expectations in Turkish Industry", the net equilibrium rate of the manufacturers expecting growth in the production volume within the next 12 months despite of the financing conditions and inflationary pressures is recorded as 45.4 percent. This result indicates that the trust in the manufacturing overview for the next one year among the manufacturers is high. While the research indicates expectation of profitability for the next one year, the expectations regarding investment costs, orders and new hires are positive, too. And the costs of imported raw materials are expected to be affected negatively.

"We share the economy check-up results for the next one year"

"Our cooperation with IHS Markit that continues for the last three years is now carried to a brand new dimension with the 'Overview and Expectations in Turkish Industry' report, which is very important and whose importance for the industrialists will be better understood in the following periods." said Erdal Bahçıvan, ICI Chairman of the Board. "The report that will be issued quarterly will create a very significant data set that will sniff the next 12 months of the Turkish industry, and reveal the expectations and assessments. We will assess the expectations about various aspects ranging from R&D to investment, employment to digitalization, financing - the most important subject of the present - to inflation with an annual perspective, and share this with the public. With this report, we are offering an index with brand new forecasts, a forecast report, in a way a check-up report of the economy to the service of all the actors in the Turkish economy."

Erdal Bahçıvan continued by stating that the data in the report is very close to the facts of the field and the market. "This is an important indication regarding the quality of the report and the competence of Markit in this subject. We are the only non-governmental organization that IHS Markit cooperates in the world. Thus, we, as ICI, attach great importance to this cooperation. And we aim to offer the knowledge and resources of our business partner, IHS Markit, which proved its quality in the world with the sound economical researches that it conducts and the scientific data sets that it creates, to the service of Türkiye more. This study that we published will be a huge discussion topic in the following period. It will be associated with ICI and enter into the literature of the industry in Türkiye and Istanbul." said Bahçıvan. 

The net equilibrium in employment is positive with 32 percent

The positive expectations regarding economical operations in the survey is a result of the forecasts indicating higher degree work orders from customers both in the domestic and overseas markets. The net equilibrium between the manufacturers expecting increase in new orders from the overseas markets and the ones expecting decrease is recorded as strong positive with 46.4 percent. The net equilibrium where the survey participants have positive expectations especially regarding domestic consumer demand is observed as 33.1 percent. The manufacturers plan to increase their production capacities in the next term depending on the positive sales expectations. While almost 40 percent of the firms expect to increase the employment level, only 8 percent forecasted a drop in the employment. The net equilibrium in employment is 32 percent. March data indicated that the manufacturers plan to increase both their investment expenses and their R&D budgets. 29.2 percent that is the positive net equilibrium value showed growth expectation in investments for digitalization.

They have positive expectations for profitability and negative for financing costs

While the manufacturers in Türkiye are optimist about accessing financing with a net equilibrium value of 21 percent, they seem worried about the financing costs. The net equilibrium value of 20.0 percent in March is an indication of a positive general profitability overview in the Turkish manufacturing industry. The expectations for improvement in the profitability level are observed to result from positive estimates regarding production and new orders. The survey also revealed that the participants expect an increase in the raw material prices throughout the year. While this increase in the imported product prices is expected to affect the companies negatively, especially the exchange rates stand out among the factors that may affect the operating performance.

Investment, R&D and digitalization expenses will increase

March data indicate that Turkish manufacturers plan to increase their investments costs widely in the next 12 months. Investment expenses had the highest value among the three categories monitored in the investment section of the survey with a net equilibrium value of 33.0. While the net equilibrium value regarding R&D expenses is recorded as 29.7 percent, it was observed that the Turkish manufacturing industry certainly put increasing their digitalization expenses into their agenda with a net equilibrium of 29 percent. Moreover, the survey indicated that the participants expect increase both in the raw material prices and labor costs throughout the year. While this increase in the imported product prices is expected to affect the companies negatively, especially the exchange rates stand out among the factors that may affect the operating performance. These results revealed the expectation that the inflation pressures on the manufacturing industry will maintain its strong progress in the next period, too.

Moore: "Manufacturers have high confidence"

Tim Moore, IHS Markit Deputy Director assessed the data of the survey titled "Overview and Expectations in Turkish Industry":

"The survey data collected within the scope of the report on 'Overview and Expectations in Turkish Industry' indicate that the manufacturers have extremely high confidence in the future economic operation conditions. It is expected for the growing export and increasing domestic consumption to support the growth in production. While the cost pressures are named as the main challenge, it is hopeful that this situation had not hindered the plans to expand the investment expenses and employment in the next 12 months."

Istanbul industry is mainly confident about production increase

And the 51.2 percent net equilibrium regarding production in the report on "Overview and Expectations in Istanbul Industry" indicated that the manufacturers trust that the economic operations will increase in the next 12 months. While expansion is expected with new orders, the profit forecasts of the manufacturers is very strong. The report revealed that the Istanbul manufacturers plan to increase their investment expenses in the next 12 months and expect their cost burdens to increase.

Report to be issued quarterly

"ICI Report on Overview and Expectations in Turkish and Istanbul Industry" that will be issued quarterly by ICI and IHS Markit reveals the expectations regarding the economical operations of industrial firms in Türkiye and Istanbul for the next 12 months. For this research that is part of the Global Economic Operations Overview report series published in 18 countries including USA, Germany, France, United Kingdom, China, Japan, Russia and India, the opinions of the industrial firms are collected. The survey establishes indexes measuring expectations in areas such as Economic Operations, Employment, Inventories, Investment Expenses, R&D Expenses, Input Prices, End Product Prices and Profitability. In the survey that also monitors the expectations of the Turkish manufacturers regarding business opportunities, export volume, digitalization investments and access to financing, factors that may affect the business performance either positively or negatively such as the exchange rates are identified.