Turkey’s economic confidence index plunges 15.4% m/m in March

By bne IntelliNews March 30, 2015

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.

Turkey's Confidence Indices
  Dec Jan Feb Mar
Economic 90.98 90.65 88.50 74.9
Consumer 67.75 67.71 68.06 64.4
Real Sector 108.10 106.20 104.00 100.9
Services 98.94 101.09 101.96 101.2
Retail 107.14 104.23 103.40 103.0
Construction 83.44 82.56 85.00 83.7
source: tuik        

Related Articles

Turkey to refuse extradition of all suspects to US unless Washington hands over Gulen says Erdogan

Turkey will not extradite any terror suspects to the US if Washington continues to refuse to hand over Fethullah Gulen, President Recep Tayyip Erdogan said on January 11. Ankara blames the ... more

Record decline in Turkish central bank’s gross forex reserves pushes holdings to $89.9bn

The Turkish central bank reported on December 7 that its gross forex reserves last week experienced a record drop, declining to $89.85bn on December 1 from $96.35bn a week earlier. ... more

EU governments reportedly agree to cut Turkey’s pre-accession funds

EU governments have agreed with the European Parliament to withdraw €105mn that would have gone to help finance political ... more