Turkey's business confidence index deteriorates in July

Turkey's business confidence index deteriorates in July
By bne IntelliNews July 25, 2017

Turkey’s business confidence index declined from 112.4 in June - the highest level recorded since May 2014’s 113.5 - to 109.5 in July, central bank data showed on July 25.

The real sector confidence index was at its lowest ebb this year in January, mainly due to a significant depreciation of the Turkish lira plus political uncertainties amid terror attacks and the heated debate over the referendum on constitutional amendments for a shift to an executive presidency. The government introduced a set of stimulus measures during the first quarter in the build-up to the April 16 vote on the introduction of the powerful presidency.

Four of the business sentiment survey’s eight sub-indices improved in July compared to June’s readings. The indices measuring current orders, capital investments, the current level of stocks and export orders for the next three months showed improvements compared to June.

The sub-indices for the general business situation, employment for the next three months, and for output volume in the coming three months pointed to deterioration.

Leading indicators hint at a strengthening economic recovery in the second quarter, the central bank said last month in the minutes of its latest Monetary Policy Committee (MPC) meeting. April’s industrial production and May PMI data signaled a more robust increase for the second quarter than in the first quarter.

Not only the manufacturing industry, but also services, retail trade and construction have seen strengthening activity recently. Accordingly, the economic recovery appears to be widespread across sectors, the central bank also said on June 22.

The tense political atmosphere stemming from the ongoing state of emergency, extended in mid-April for another three months, will continue to impair business and consumer confidence, holding back investment and consumption and keeping growth low by historical standards, Moody’s Investors Service warned in April.

Data

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