Turkish industrial production expanded 2.4% year-over-year in July, much lower than expectations, data showed on Tuesday, indicating a moderation in production as demand falls due to a global slowdown.

The industrial production index has expanded on an annual basis for more than two years despite surging inflation and lira weakness.

The index declined 6.2% month-on-month in July on a calendar and seasonally adjusted basis, data from the Turkish Statistical Institute (TurkStat) showed.

The annual industrial production data point towards moderation in the sector, said Enver Erkan, chief economist at Tera Yatırım.

"It looks like the declining demand due to global economic slowdown and the slowdown in export markets are going to impact production," he said, adding that annual figures in industrial production will likely ease in coming months.

Turkey has pursued a new economic program in the past year, which prioritizes production, investment and exports, with the aim of turning the country's chronic current account deficits into a surplus.

However, the sharp rise in global commodity and energy prices this year has made that target all but unattainable, and the government's three-year forecasts do not a see a surplus. A global slowdown also threatens to hit Türkiye’s exports.

The central bank cited a slowdown in the third quarter as it cut its policy rate to 13% last month, even as inflation remains above 80% and an easing cycle last year sparked a currency crisis.

The decline in foreign demand is likely to lead to a decline in exports, and, together with soaring energy prices, would widen the current account deficit, Erkan said.

In a Reuters poll, the median of four economists' forecast was for a rise of 8.98% in the annual industrial production index.