When industrial production data are released, attention often focuses solely on monthly or annual rates of change.
Yet these figures alone are not enough to tell the real story of an economy. Industrial data do more than show how much factories produce. They also reflect production capacity and how it is changing, technological transformation, productivity gains, employment creation and the economy's broader growth potential.
Although published monthly with a time lag, industrial data therefore reveal not only how much production has increased, but also which sectors are driving growth and what kind of structural transformation, if any, is taking place.
More importantly, they show the extent to which that growth may contribute to a lasting improvement in prosperity.
Let us take a closer look at the latest figures.
At first glance, industrial production data for May 2026 point to a clear loss of momentum. Output was almost unchanged from the same month a year earlier, effectively indicating zero annual growth, while seasonally and calendar adjusted production fell by 2.9 percent from the previous month.
The more striking issue, however, is the source of that decline. Almost the entire contraction came from manufacturing. In particular, the 12.7 percent fall in capital goods production and the 11.5 percent decline in the medium high technology segment raise serious concerns about investment trends and the economy's future productive capacity.
By contrast, the 7.9 percent annual increase in high technology production stands out as a positive development. It remains unclear, however, whether this increase is sufficiently large and persistent to drive industrial production as a whole.
A closer examination of monthly industrial production between January 2005 and May 2026 reveals the vulnerabilities of Türkiye's economy as clearly as it illustrates its growth dynamics.
Let us begin with the monthly rates of expansion and contraction.
According to seasonally and calendar adjusted data, the arithmetic mean of monthly changes between 2005 and 2026 was 0.48 percent, while the median was 0.46 percent.
The compound average monthly growth rate calculated from index levels was approximately 0.36 percent. Although this shows that industrial production followed a long term upward trend, it also makes clear that growth was far from stable.
The standard deviation of monthly changes reached 3.55 percentage points. In other words, volatility in industrial production was around seven times greater than its average rate of growth.
Production increased in 151 of the 257 months examined and declined in 106. Put differently, industrial output contracted in roughly two out of every five months.
More importantly, industrial production entered a technical recession 22 times during this period, with output falling for at least two consecutive months. The longest contraction lasted seven months during the global financial crisis of 2008 and 2009. Similar recessionary episodes were also observed following the 2018 currency shock and during the slowdowns of recent years.
The data therefore show that the fundamental problem facing Turkish industry is not merely an insufficient rate of growth. It is also marked by high volatility, frequently recurring contractions and a persistent failure to establish stability in production.
In financial literature, risk is generally regarded as an inseparable cost of expected return. High volatility imposes a similar cost on industry.
As uncertainty rises, investment decisions are postponed, capacity utilisation rates decline, financing costs increase and productivity growth weakens. As a result, a substantial share of the gains generated by economic growth is eroded by volatility.
This leads us to conclude that lasting improvements in prosperity depend on finding the optimal combination of two elements: the average rate of growth and the cost of risk associated with it.
How the deterioration of this balance contributes to the impoverishment of the public remains a question that requires further examination.