The economic confidence index plunged 15.4% m/m in March to 74.85, the index’s lowest level on record, data of the statistics office TUIK showed on March 30, causing concerns about the health of the economy.

The sharp decline in the headline index stemmed from the decreases in all five subindices of consumer confidence, manufacturing, services, retail and construction confidence.

The real sector (manufacturing) confidence index was down 3% m/m, retail confidence fell 0.4% m/m, construction confidence dropped 1.6% m/m. The sharpest decline was in consumer confidence which fell 5.4% m/m in March.

Economy minister Nihat Zeybekci recently voiced optimism for economic growth, saying that he expect exports and economic growth to pick up after March. The central bank already warned that leading indicators did not point to a recovery in the economic activity during the first quarter. TUIK will release GDP data for the fourth quarter of 2014 on March 31. GDP growth slowed to 1.7% y/y in Q3, from 2.2% in the second quarter and 4.8% y/y in Q1. GDP is expected to grow at 2% y/y in the fourth quarter of 2014, showed a recent Reuters poll of economists who also predicted a 2.7% growth for the Turkish economy in the whole of 2014. The economy is expected to grow by 3% this year.

The central bank can come under pressure from politicians again to cut interest rates to boost economic growth ahead of the June parliamentary elections. President Recep Tayyip Erdogan’s sharp criticism of the central bank over interest rates recently hit the lira to record lows against the dollar. Following the sharp volatility in currency, Erdogan stopped publicly criticising the central bank’s policies.