Turkey’s factory sector just posted its worst contraction since the early days of COVID-19. The Istanbul Chamber of Industry’s Manufacturing PMI dropped to 45.7 in April, down from 47.9 in March, as the ongoing Iran conflict ripped through supply chains and sent input costs spiraling.
Any reading below 50 signals contraction. A reading of 45.7 signals something closer to a red alert.
What’s driving the decline
The war in the Middle East, which escalated after US-Israel military strikes against Iranian facilities beginning in late February, has created a cascading set of problems for Turkish manufacturers. Supplier delivery times have now lengthened for seven consecutive months. Material shortages, particularly in fuel and petrochemicals, have worsened. And input cost inflation hit its fastest pace since January 2024.
Turkish firms responded the way firms always do when the walls close in. They cut employment, reduced purchasing activity, and slashed inventories. Some companies simultaneously tried to build safety stocks, a hedging move that reflects deep uncertainty about whether conditions will get worse before they get better.
