This figure is far worse than expectations, which are also rapidly being revised downwards. According to the median estimate of eight economists polled by Bloomberg, output for August was expected to decline 0.3 percent. It is therefore no exaggeration to say that the industrial output figures for August came as a shock.

In the first eight months of 2008 industrial production grew by 3.6 percent year on year. In the same period last year this figure was 5.8 percent. The current contraction in industrial output is the first in 2008 and the biggest decline since January 2006.

As soon as the TUIK announced the August industrial output figures, economic growth forecasts prepared by different financial institutions for 2008, were cut by 2 percentage points from previous estimates of 4 to 4.5 percent. Expectations for 2009 look even gloomier.

Initially the economic growth target of the Islamist AKP (Justice and Development Party) government was 5 percent for this year, later revised to 4.5 percent.

Also on Wednesday the Turkish Union of Chambers and Commodity Exchanges (TOBB) issued figures confirming that Turkish capitalism is moving into a dramatic slowdown phase. According to the TOBBs Trade Registry figures, in the first nine months of this year the number of newly established companies has decreased by 4.99 percent compared with a year ago. Over the same period the number of company closures was up by 1.49 percent.

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