NEWS ECONOMY NEWS        27/02/2020

Turkey’s economic confidence index increases 0.5% in February 2020

According to figures provided by Turkey’s state statistical institution TÜİK (TurkStat), Turkey’s seasonally adjusted economic confidence index increased by 0.5% to 97.5 points in February 2020 from 97.1 points in the previous month of January. The index was revised In January 2019 to allow for seasonal adjustments, and was further revised arbitrarily in January 2020. The revised index at the beginning of 2018 was 106.2 ponts, and this fell to a revised 82.5 points at the beginning of 2019.

 

The services sector confidence sub-index increased 3.4% to 98.5 points and the real sector confidence sub-index increased 0.3% to 106.7 points, whereas the consumer confidence sub-index decreased 2.7% to 57.3 points, the retail trade confidence sub-index decreased 2% to 102.9 points, and the construction sub-index decreased 5.7% to 74.5 points. 

 

Despite upward revisions, Turkey’s economic confidence index is still below the crucial 100 points level. In Turkey, the economic confidence index is a composite index that covers encompasses consumers’ and producers’ evaluations, expectations and tendencies about the general economic situation. The index is produced by a combination of a weighted aggregation of normalized sub-indices of consumer confidence, seasonally adjusted real sector (manufacturing industry), services, retail trade and construction confidence indices. The economic confidence index indicates an optimistic outlook about the general economic situation when the index is above 100, and contrarily indicates a pessimistic outlook when it is below 100. 

 

The director of Fitch Ratings’ sovereign team, Douglas Winslow, in an interview with Anadolu Agency on February 27th following the announcement of Turkey’s economic confidence index for February 2020,  said that he had greater confidence that Turkey’s economic growth would recover in the near term. with the longer-term potential growth trend of the Turkish economy being around 4.3%. He reminded that Fitch had upgraded Turkey’s 2020 GDP forecast by 0.8% to 3.9% and its 2021 GDP forecast by 0.4% to 4.0%. He said that this growth would be “driven by private consumption and supported by the lower interest rate, as well as a pretty sharp pickup in private bank lending, which is growing around 25% currently.” He added that he expected investment to grow by around 3% in 2020, supported by confidence deriving from the better current account position, which moved to a surplus of 0.2% of GDP in 2019.” 

 

Winslow noted that "We do see some near-term risks of greater volatility. For example, from geopolitical developments, and particularly from monetary policy if interest rates are cut too much, and that puts additional pressure on the lira."

 

With regards the possibility of upgrading Turkey’s sovereign credit rating in the future, Winslow said that  “In terms of opportunities from the ratings perspective, if we saw better reform progress against the government’s new economy program, (this) would be helpful for the ratings. For example, if we saw pension reforms to boost to Turkey’s saving rate… We think the condition for implementing difficult reforms is better this year given that the economy is recovering and there are no elections planned for three-and-a-half years.”
 



Turkey’s net minimum wage has been raised 21.56% to TL 2,825.90 (USD 380) as of 01.01.2021       Migration communication helpline 157 available for foreigners in Turkey       Read our homepage articles on developments in the Turkish economy       Turkey’s official annual inflation rate increases to 18.95% in July 2021       Turkey’s official unemployment rate decreases to 13.2% in May 2021       Read our BUSINESS section for latest sectoral and corporate news       Turkey’s population is 83,614,362 as of 2020 yearend       Foreigners visiting Turkey in 2020 falls by 71.7% to 12.7 million       Turkey’s private sector foreign debt is USD 173.9 billion as of 2020 yearend       Turkey’s economy grew by 1.8% in 2020       Foreign Direct Investment inflow to Turkey was USD 7.7 billion in 2020