The Turkish Statistical Institute (TÜİK – TürkStat) has changed the method by which it calculates Turkey’s seasonally adjusted consumer confidence index in September 2020. It says that this change was made in accordance with recommendations made by the European Commission Directorate-General for Economic and Financial Affairs, and also with the aim of allowing the index to be compatible on an international level. To this end, TurkStat has removed two of the four sub-indices from the calculation. These are the probability of savings sub-index and the number of people unemployed expectation sub-index. The remaining two indices are the general economic situation expectation sub-index and the financial situation expectation of households sub-index. Two new sub-indices have been added to these two remaining indices. These are the financial situation of household sub-index (current situation compared to last 12 months) and the tendency to purchase durable consumer goods (current situation compared to last 12 months).
Changes in calculations of statistics by TurkStat over the last two years have become a regular feature. This development does not allow figures produced to be meaningfully analysed in depth over time with an aim to establish economic and behavioural trends. Market analysts in particular will be adverse to using such unreliable figures as support for their economic evaluations and projections.
In accordance with the new calculation formula, TurkStat has announced its consumer confidence index for January 2021 as 83.3 points, a 4% increase on the December index of 80.1 points.
The consumer confidence’s sub-indices in January 2021 are as follows :
- The financial situation of household sub-index (current situation compared to last 12 months) decreased by 3.6% to 63.7 points in January 2021 compared with the previous month.
- The financial situation expectation of households sub-index (expectation over the next 12 months) increased by 6.3% to 83.8 points in January 2021, compared with the previous month. .
- The general economic situation expectation sub-index (expectation over the next 12 months) increased by 6.5% to 88.2 points in January 2021, compared with the previous month.
- The tendency to purchase durable consumer goods sub-index (current situation compared to last 12 months) increased by 5.1% to 97.3 points in January 2021, compared with the previous month.
In Turkey, the Consumer Confidence Index survey aims to measure present situation assessments and future period expectations of consumers' on personal financial standing and general economic course and to determine consumers' expenditure and saving tendencies in the near future. The survey covers a randomly selected sample of all individuals at the age of 15 and above having a job in urban and rural areas. The index is evaluated between 0 and 200. The reading above 100 means consumers are optimistic and below 100 are pessimistic.
The current level of confidence reflects a pessimistic outlook by consumers and would need to rise above 100 to indicate optimism. The index is considered an important gauge of the overall health of the economy in that it assesses the confidence of people to spend money, which in turn is an indication of the vitality of the economy.