The economic confidence index fell 1.9% m/m in August to 84.3 after rising 6% m/m in the previous month, data of the statistics office TUIK showed on August 28.

The economic confidence index is a composite index gauging consumers’ and businesses’ assessments of the economic outlook and their expectations.

According to data of TUIK, consumer confidence index dropped 3.6% m/m in August that came on top of the 2.7% m/m decline in the sub-index in July, while the real sector confidence index fell 0.1% m/m versus 1.4% m/m increase.

Other sub-indices, namely service sector confidence, retail sector confidence, and construction sector confidence, all posted declines in the month with retail sector registering the sharpest decline of 2.6% m/m.

Turkey is headed towards fresh parliamentary elections, which according to some polling agency would produce yet another hung parliament, at a time the clashes between the security forces and PKK intensify. A dangerous combination of political uncertainty and the flare up in violence is likely to continue to hurt consumer and business confidence.