Consumers still on the sidelines

Another month, another set of data showing bumper industrial production growth. Turkish industry is leading the way and is now growing by close to 20% y/y. But most other countries in the region are experiencing double-digit industrial production growth too. For now, then, the most pressing concern is that despite the boom in industry, consumer spending remains fairly subdued. There are various factors at play including tight credit conditions, weak labour markets and, in the case of Russia, rising inflation. The exceptions to this are Turkey and, to a lesser extent, Poland. In both cases, however, robust consumer demand has led to worrying increases in their current account deficits.