Industrial production fell by -1% m/m in April, the first m/m decline after three months of increases. In y/y terms, the contraction in industrial output accelerated to -4% from -2% y/y in March. The production of intermediate goods (-8.5% y/y) and capital goods (-7.6% y/y) dropped particularly sharply. Likewise, real retail sales declined by -1.8% m/m in April, the first such fall after three months of increases. In y/y terms, the decrease in retail sales accelerated as well, to -6.9% from -3.4% y/y in March. In all, these developments do not bode well for investment and consumer spending at the start of Q2. It appears that the political and financial turmoil in the aftermath of the local elections has not only led to a renewed drop in sentiment but also in real economic activity. Expect renewed turmoil after the Istanbul election rerun on Sunday, 23 June. Meanwhile, the current account deficit widened to -USD1.3bn in April from -USD0.6bn in March, though the 12-month cumulative deficit continued to narrow, to -USD8.6bn in April from -USD12.9bn in March. For 2019 as a whole we forecast a shortfall of -2.2% of GDP.
