Turkey’s Industrial Production Contracts Sharply in November: A Data-Driven Analysis
Table of Contents
Turkey’s industrial sector contracted by 2.20% month-on-month in November 2025, according to the latest release from the Sigmanomics database. This figure starkly contrasts with the 0.80% growth expected by economists and follows a mild 0.40% increase in October. The decline is the most pronounced since June’s 3.10% drop and continues a pattern of volatility seen throughout 2025.
Drivers this month
- Manufacturing output fell sharply amid weaker domestic demand and supply chain disruptions.
- Energy-intensive industries saw reduced activity due to higher input costs and regulatory pressures.
- Export-oriented sectors faced headwinds from global demand slowdown and geopolitical uncertainties.
Policy pulse
The contraction comes amid ongoing monetary tightening by the Central Bank of the Republic of Turkey (CBRT), which has raised policy rates to combat inflation running above 40%. The industrial slowdown suggests that tighter financial conditions are beginning to weigh on real economic activity.
Market lens
Immediate reaction: The Turkish lira (TRY) depreciated 0.70% against the USD within the first hour after the data release, while 2-year government bond yields rose by 15 basis points, reflecting increased risk aversion and growth concerns.
Industrial Production is a core macroeconomic indicator reflecting the health of Turkey’s manufacturing, mining, and utilities sectors. The November reading of -2.20% MoM contrasts with the 12-month average growth of approximately 0.10%, underscoring a recent trend toward stagnation and contraction.
Historical context
- February 2025 saw a strong rebound of 5.00% MoM, the highest in the past year.
- Subsequent months have been volatile, with contractions in March (-2.30%), April (-1.60%), June (-3.10%), and September (-1.80%).
- October’s modest 0.40% growth was insufficient to reverse the overall downward trend.
Monetary policy & financial conditions
The CBRT’s aggressive rate hikes, pushing the benchmark rate above 30%, have tightened credit conditions. Inflation remains elevated, eroding real incomes and dampening industrial demand. The contraction in IP reflects these pressures, as borrowing costs rise and consumer spending slows.
Fiscal policy & government budget
Fiscal tightening and reduced government spending on infrastructure projects have further constrained industrial activity. The government’s budget deficit remains elevated, limiting stimulus capacity amid rising debt servicing costs.
Sectoral breakdowns reveal that durable goods and energy sectors contributed most to the decline, while food and beverage manufacturing showed resilience. Supply chain disruptions and rising input costs continue to pressure output.
This chart highlights Turkey’s industrial sector trending downward after a brief recovery in October. The persistent contractions suggest that monetary tightening and external shocks are weighing heavily on production. Without policy adjustments or external demand improvement, the sector may face further declines.
Market lens
Immediate reaction: The TRY weakened sharply, reflecting investor concerns about growth prospects. Short-term yields rose, signaling expectations of prolonged monetary tightening and risk premiums.
Looking ahead, Turkey’s industrial production faces a complex mix of risks and opportunities. The baseline scenario projects modest stabilization with 0.50% MoM growth over the next quarter, assuming inflation moderates and monetary policy eases slightly.
Scenario analysis
- Bullish (20% probability): Global demand rebounds, easing export pressures; CBRT signals pause in rate hikes; IP grows 1.50% MoM.
- Base (55% probability): Inflation remains sticky; monetary tightening continues; IP stabilizes around 0.50% MoM growth.
- Bearish (25% probability): Geopolitical tensions escalate; energy prices spike; IP contracts further by 1.50% MoM.
Structural & long-run trends
Long-term growth depends on structural reforms, including improving the business climate, enhancing productivity, and diversifying exports. Without these, Turkey risks prolonged industrial stagnation amid global economic shifts.
Turkey’s November industrial production contraction highlights the challenges facing its economy. Tight monetary policy, fiscal constraints, and external shocks have combined to slow industrial output. The Sigmanomics database confirms a fragile recovery path, with risks tilted to the downside.
Financial markets have priced in these risks, with currency depreciation and rising yields. Policymakers face a delicate balancing act between controlling inflation and supporting growth. Structural reforms remain essential for sustainable industrial expansion.
Investors and analysts should monitor upcoming inflation data, CBRT communications, and geopolitical developments closely to gauge the trajectory of Turkey’s industrial sector.
Key Markets Likely to React to Industrial Production MoM
Turkey’s industrial production data is a key barometer for domestic economic health and investor sentiment. The following tradable symbols historically track or influence the sector’s performance:
- ASELS – A leading Turkish defense manufacturer sensitive to industrial output trends.
- USDTRY – The USD/TRY currency pair reacts sharply to growth and inflation data.
- TUPRS – Turkey’s largest oil refinery, linked to industrial energy demand.
- BTCUSD – Bitcoin’s price often reflects risk sentiment shifts impacting emerging markets.
- EURTRY – The Euro/Turkish lira pair is sensitive to geopolitical and economic developments.
FAQs
- What does Turkey’s Industrial Production MoM indicate?
- It measures monthly changes in Turkey’s industrial output, reflecting economic activity in manufacturing, mining, and utilities.
- How does the November 2025 IP reading affect Turkey’s economy?
- The -2.20% contraction signals slowing industrial activity, influenced by tight monetary policy and external risks, potentially dampening growth.
- Why is Industrial Production important for investors?
- It provides insight into economic momentum, influencing currency, bond yields, and stock prices linked to industrial sectors.
Takeaway: Turkey’s industrial sector is at a crossroads, with recent contractions highlighting the need for balanced policies and structural reforms to restore growth momentum.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The November 2025 industrial production figure of -2.20% MoM represents a sharp reversal from October’s 0.40% and is well below the 12-month average of 0.10%. This marks the third contraction in four months, signaling a weakening industrial sector.
Comparing recent months, the sector’s volatility is evident: February’s 5.00% surge contrasts with June’s -3.10% plunge. The latest decline aligns with a broader slowdown in manufacturing PMI and export volumes.