Turkish business and consumers disagree on economic prospects

By bne IntelliNews November 2, 2012

bne -

Indicators released on November 1 painted an unclear picture in the Turkish economy, with business apparently pushing forwards but consumers exhibiting severe uncertainty.

Turkish manufacturing data released by HSBC provided hope that the economy may have accelerated towards the end of the third quarter and the beginning of the fourth. The Purchasing Managers Index edged higher for the third month in a row to leave it at 52.5 in October, compared with September's 52.2, hinting at continued improvement in the pace of growth. A reading above 50 indicates expansion, and the October figure is the highest of the last 12 months.

Erste Bank points out that the sub-indices were also healthy. "The output index advanced to 53.9 from 53.5, while the new orders component rose to 52 from 51, which were favorable signals regarding the sustainability of the uptrend going forward," analysts wrote.

The expansionary trend is particularly notable for its contrast to many other CEE countries. The likes of the Czech Republic and Poland have been suffering poor PMI reports in recent months as export demand from their main markets in the Eurozone continue to cool.

However, Turkey is far less exposed to Europe, as Capital Economics points out. "One reason behind [the strong PMI reading] is the resilience of external demand - with Turkey benefiting from trade ties to nearby countries in the Middle East and North Africa. The Turkish new export orders component was the only one in the region to rise in October. Meanwhile, data released yesterday showed that exports rose by 21% y/y (in US dollar terms) in September."

However, the apparent improvement has not been noticed outside the commercial world, as consumers eye rising regional tension, alongside a host of tax hikes enacted by Ankrara recently. The same day as the PMI release, the CNBC-e Consumer Confidence Index reported a fall of 9.7% month on month in October, to leave it at its lowest level since March 2009.

"The decline was related to the deterioration in both the Consumer Expectations Index and Consumption Tendency Index, which dropped by 5.9% m/m and 9.8% m/m, respectively," point out the Erste anslysts. "The geopolitical risks, along with the administered price hikes and tax adjustments, may have amplified the souring in sentiment. Consumer Confidence fell by a visible 14% year to date as of October, and the renewed downtrend since 3Q12 suggests that the recovery in the economic activity expected for 4Q12 would be a moderate one."

Related Articles

Turkey approaches day of reckoning on economic reform

Kivanc Dundar in Istanbul -   The unexpected success of President Recep Tayyip Erdogan’s Justice and Development Party (AKP) in this month’s general election should bring much-desired political ... more

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Turkey and America seen on course for confrontation in Syria war

John Davison of Exaro - Military action by Turkey against Kurdish rebel forces in Syria raises the prospect of a direct clash with the ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss