Türkiye İMSAD Publishes Monthly Sector Report

Türkiye İMSAD Releases Monthly Sector Report Türkiye İMSAD has released its monthly sector report, which is closely monitored by construction-sector and economic circles. According to the 'Türkiye İMSAD August 2021 Sector Report', construction materials industry production increased by 47% in the second quarter of 2021 due to rising demand in domestic and foreign markets. The following findings were included in the 'August 2021 Sector Report' prepared by Türkiye İnşaat Malzemesi Sanayicileri Derneği (Türkiye İMSAD), the umbrella organization of the construction materials sector: Construction materials industry production was affected by new conditions created by the pandemic in 2020. Production contracted by 24.1% in April 2020 and by 26.8% in May 2020 due to the pandemic. Industrial production made a sharp recovery in June 2020, increasing by 27%. Government support for the construction sector and the revival of stalled construction projects were influential in this recovery.

In the second half of 2021, significant recovery was seen in both domestic and foreign demand. Construction activity, stimulated by government support for the construction sector, had a positive impact on domestic demand.

Abroad, construction materials demand for Turkey expanded due to disruptions in the global supply chain and rising freight costs. Consequently, increased exports supported industrial production. Growth in construction materials industry production continued uninterrupted in 2021. In the first quarter of the year, construction materials industry production grew 17% compared to the same period last year. Considering that industrial production increased by 8% in the same quarter last year, the 17% growth in the first quarter of this year was a significant indicator. In the second quarter of 2021, increases in industrial production were much higher. Construction materials industry production increased by 67.2% in April, 47.3% in May, and 26.5% in June compared to the same periods last year. While construction materials industry production contracted by 8% in the second quarter last year, a 47% increase in production was achieved in the second quarter of this year. In other words, production growth well exceeded the production loss from last year. Strong demand in domestic and foreign markets resulted in high production increases.

Construction sector grew 3.1% in second quarter

The construction sector, which grew 3.3% in the first quarter of 2021, grew 3.1% in the second quarter of the year. Thus, growth in the construction sector in the first half of the year reached 3.2%. In the first half of last year, when pandemic effects were most severe, the construction sector contracted by 5.3%. The construction sector did not fully recover last year's losses in the first half of 2021. TÜİK also revised the construction sector contraction for 2020 from 3.4% to 5.5%.

Construction expenditures in second quarter reached TRY 208.1 billion

In the second quarter of 2021, construction expenditures increased 49.2% at current prices compared to the same quarter last year and amounted to TRY 208.1 billion. Growth in construction activities in the second quarter was primarily due to base effects. Nevertheless, the threshold of TRY 200 billion in quarterly expenditure was exceeded for the first time.

Divergence between general economy and construction sector growth continued

The positive relationship between the construction sector and overall economic growth has deteriorated for some time, and the construction sector experienced contraction against growth in the economy. The same negative divergence continued throughout 2020. In the first two quarters of 2021, although the construction sector showed growth, the divergence continued. Indeed, strong growth was achieved in the overall economy and other sectors in the first two quarters. Growth in the construction sector, however, remained limited.