Consumer sentiment in Turkey inched up by 0.6% m/m to 70.3 on the index in June, data from national statistics office TUIK showed on June 21.
TUIK’s data releases continue to surprise observers - this particular release covers a period in which consumers have been beset by the collapse of the Turkish lira (TRY), possibly the start of a sharp economic downturn and the uncertainties caused by the calling of the early elections scheduled for June 24. Analysts expected the index to move downwards.
However, optimism may have been generated by Turkish consumers positively assessing the government’s pre-election stimuli.
The TRY hit its record low of 4.9294 against the USD on May 23, pointing to a 30% loss since the beginning of 2018 and a 22% weakening in May alone. However, following an emergency rate hike announced late on May 23 the currency staged something of a recovery, pulling back to below 4.50.
Subsequently, with President Recep Tayyip Erdogan indicating to voters on the election trail that if re-elected he will roll back the recent interest rate hikes, the TRY has undergone another bout of weakness. As of 10:30 local time on June 21, the TRY stood at 4.7370 to the dollar. On the previous day, it was trading around the 4.75 level.
Meanwhile, Prime Minister Binali Yildirim, possibly Turkey's last ever PM with the position to be abolished after the elections by constitutional changes in favour of an executive president, said that recent sharp increases recorded in onion and potato prices were speculative and nothing else.
“We will not talk about this issue in a few days”, said Yildirim.
BloombergHT reported on June 21 that the sharp increases in vegetable prices were not limited to onions and potatoes. Rising fertilizer and transportation costs due to the severe depreciation of the lira along with farmers cutting production on the back of low prices last year and unfavourable weather conditions have all weighed on vegetable prices, according to the news service.
Economy Minister Nihat Zeybekci has said that the government is to allow onion and potato imports in order to curb speculative price movements.
Turkish voters will also go to the polls in March 2019 for the municipal elections. For whoever wins the parliamentary and presidential elections on June 24, the March 2019 local polls may prove an instructive vote of confidence.
Turkey’s economic confidence index fell by a sharp 5% m/m to 93.5 in May, the lowest level seen since February 2017, data from national statistics office TUIK showed on May 30.