The consumer confidence index fell 4.3% m/m to 69.2 in February, data of the statistics instate TUIK showed on Thursday. The index dropped for a third consecutive month. The previous lowest figure recorded at 69.3 in October 2012.

TUIK data showed that consumers’ assessments regarding general economic outlook in the next 12-month period deteriorated further with the related sub-index falling another 3.9% m/m in January. Consumers do not expect a significant improvement in labour market conditions in the next 12 months.

The index measuring the probability of savings in the next 12 months slumped 15.8% m/m in the month after it rose 9.6% m/m in January while the index for probability of buying a house fell sharply 17.1% m/m after rising 3% m/m the previous month.

TUIK survey also showed that the index measuring the probability of buying a car in the next 12 months declined 17.1% m/m after it rose 3% m/m in January. This reading supports automotive industry players’ expectations that domestic market this year may contract around 20%.

There are several developments that have affected consumer sentiment. The volatility and depreciation of TRY is one of these factors while the increased tension in domestic politics is another reason. The inflation outlook deteriorated and GDP growth prospect for this year is not very bright. The government expects a GDP growth of 4% this year, but international institutions’ (European Commission, IMF and World Bank) forecasts range between 2.5% and 3.5%. The unemployment rate rose to 9.9% in November from 9.7% in October, according to the latest data available. We expect consumer confidence to remain low and depressed as the current political turmoil shows no sign of abating yet.