Turkey’s consumer confidence index droops 7% m/m in August

Turkey’s consumer confidence index droops 7% m/m in August
By bne IntelliNews August 17, 2018

A sharp decline in Turkey's consumer sentiment reading measured at 7% m/m was seen in August. The index figure of 68.3 is the lowest level recorded since October last year, according to data from national statistics office TUIK released on August 17.

In the year to date, the index hit its lowest point in May, when a level of 69.9 was registered on the back of the accelerating collapse of the Turkish lira (TRY), fears of an upcoming sharp economic downturn and uncertainties caused by the calling of the June 24 early elections. The index subsequently moved on to a path of recovery in the following two months.

The latest consumer and market sentiment on Turkey was today (August 17) impacted by a renewed retreat of the lira. Most of the week has seen it steadily recover against the dollar from the all-time low of 7.24 recorded on August 13, but with comments from the White House indicating that Turkey is likely to be hit with another round of sanctions over its failure to release US pastor Andrew Brunson, the TRY slid back beyond the 6.0 threshold to 6.1427 versus the USD by around 16:40 local time, after a day on day decline of 5.35%. At one point during trading it moved past 6.34.

August's consumer sentiment survey included consumer reaction to the recent economic meltdown, a currency crisis that threatens to turn into a debt and equity crisis, along with a recession and possible stagflation. Turkish voters are due to go to the polls by March 2019 at the latest for the municipal elections. Given the deteriorating economic situation, expectations are mounting that the government will chance its arm earlier by bringing forward the local elections to November this year.

Debt-financed consumption has been the prime feature of the country’s remarkable economic growth achieved during much of the past decade.

Fitch Ratings expects the current account deficit to widen to 6.1% of GDP in 2018 due to higher fuel prices and higher household consumption.

Fitch on July 13 cut Turkey deeper into junk, downgrading its Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'BB' from 'BB+' with a negative outlook.

The Turkish economy saw 7.4% in annual GDP growth in the first quarter of 2018. Private consumption was again the main engine with households’ final consumption in Q1 rising by 11% y/y, higher than the 6.6% seen in Q4 2017.

 

 

 

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