The report forecasts that production will shrink by 2-3% in the last quarter of 2024 and the first quarter of 2025.
Decline in Production Since the Second Quarter
The report highlights that production in the construction materials industry began to decline starting from the second quarter of 2024. This decline has been influenced by developments in both domestic and foreign demand. It is emphasized that foreign demand remained stagnant throughout 2024, negatively impacting industrial production. Domestic demand was dynamic until the first quarter of the year, but it started to slow down from the second quarter due to the effects of disinflation policies and tight monetary policies, eventually contracting in the third quarter.
Contraction in the Third Quarter
The report notes that in the third quarter of 2024, the number of working days returned to normal and the effects of politics were minimized. Additionally, it was mentioned that tight monetary and fiscal policies were expanded. These developments had an impact on domestic demand and material industry production. Foreign demand also remained weak during the third quarter, failing to support production. As a result, construction materials industry production decreased by 2.2% in the third quarter of 2024.
It is expected that production will shrink by 2-3% in both the last quarter of 2024 and the first quarter of 2025.
Growth in the Construction Sector
While construction materials industry production shrank, the construction sector grew significantly in both the second and third quarters of 2024. It was noted that the demand created by the growth in the construction sector had not yet fully reflected in producers. Additionally, information was shared that dealers and other distribution channels had been using up their stock.
The construction sector has shown growth for the last eight quarters. In the third quarter of 2024, the construction sector grew by 9.2%. The growth rate for the second quarter was revised from 6.5% to 6.9%. The construction sector was not affected by tightening policies and its growth rate accelerated. Rebuilding efforts in the earthquake zone, urban transformation after local elections, and other construction activities supported the sector.
Significant Increase in Construction Expenditures
A significant increase in construction sector expenditures was observed. In the third quarter of 2024, construction expenditures rose by 63.3% compared to the same period last year, reaching 1.72 trillion TL. This high growth was attributed to the rise in construction costs and inflation. Real construction expenditures also increased by 9.4% in the second quarter.
Construction Sector Outpaced the General Economy
The report highlighted that the construction sector grew above the general economy in all quarters of 2023 and throughout the year, and this trend continued in 2024. In the third quarter of 2024, while the general economy grew by 2.1%, the construction sector grew by 9.2%. It was noted that tightening policies caused a slowdown in many sectors, but the construction sector was less affected by this. On the other hand, the real estate sector weakened by 2.5%.
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