‘The first real energy crisis’, looming recession and their impacts on Türkiye

Things are not going well on the global economy side. There’s a growing consensus that that the negative economic indices in particular will get worse this winter. Moreover, and most importantly, these concerns have already begun to be reflected in certain indices.

THE FIRST REAL ENERGY CRISIS

The World Energy Agency provides the most accurate data flow on developments in global energy. As you know, the head of this agency is Dr. Fatih Birol. His assessments in the field of energy are spot-on due to his extensive experience in reading the bigger picture. In this respect, it would be useful to take a look at Birol's latest assessment. Birol states that the concern that supply will not be able to meet demand in the global liquefied natural gas (LNG) markets and that the main oil producers cutting production has caused the "first real energy crisis" in the world.

Birol considers the decision of OPEC+ countries to reduce production as "dangerous" at a time when fears of a looming recession are growing.

PMI DATA IN US and EU

PMI data is one of the fastest and most reliable reference sources in the evaluation of manufacturing industry performance. The index examines the purchasing tendencies of company purchasing managers and is one of the leading indicators to see the signal of growth or contraction in the economy. Now let's look at the US and EU side for this important data.

The US's latest PMI data fell below 50. 50 is the critical threshold because below 50 indicates contraction and above 50 indicates growth in the PMI data. In this respect, the fact that the USA's PMI is 49.9 is in line with the recent recession concerns. On the EU side, things look more risky. The Euro Zone PMI also came in below expectations. While the expectation was 47.5, the realization was 47.1. In Germany, the composite PMI data fell to 44.1, the lowest level since May 2020. France's manufacturing PMI was also 47.4. In summary, PMI data for large countries continues to be formed in a way that increases recession expectations.

PRODUCTION DATA IN TÜRKİYE

As I mentioned at the beginning of my column, it is impossible not to be affected by global economic developments and, unfortunately, negative ones. In this respect, the shrinking of Europe shows that some data should be followed carefully for the Turkish economy.

For example, the latest Manufacturing Industry Capacity Utilization Rate data decreased by 0.5 points compared to the previous month and became 76.9%. Similarly, although the increase is still continuing, let's note the apparent slowdown in the Industrial Production Index. Of course, although it is not correct to evaluate the latest developments in the data alone, we need to continue to follow the said data closely, taking into account other developments.