NEWS ECONOMY NEWS        29/06/2020

Turkey’s economic confidence index rallies further by 19.1% in June 2020

According to figures provided by Turkey’s state statistical institution TÜİK (TurkStat), Turkey’s seasonally adjusted economic confidence index recuperated by 19.1% to 73.5 points in June 2020 from 61.7 points in the previous month of May. This increase follows a rally of 20.4% in May and the initial collapse of 44.1% in April. The recoveries of the index in May and June reflect expectations of the lockdown due to the coronavirus pandemic being gradually relaxed and the economy returning to normal. The 73.6 points level of the economic confidence index this month compares with the pre-pandemic 91.8 points recorded in March 2020.

 

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 construction sub-index surged a further 33.1% to 78 points, having already increased by 31.1% in the previous month of May. This index was followed by the real sector confidence sub-index which increased 22.2% to 89.8 points,

the retail trade confidence sub-index which increased 9.3% to 86.4 points, the services sector confidence sub-index which increased 8.5% to 55.5 points, and the consumer confidence sub-index which increased 5.2% to 62.6 points. 

 

It is interesting to note that the construction sub-index has recovered in June to 78 points which is higher than its pre-pandemic level of 77.2 points in March. The surge in property sales in June as a result of cheap housing loans offered by state banks is no doubt the reason behind the increase in this sub-index, but it is doubtful that this will have a long-term positive effect on the construction industry in light of the continuing economic crisis.

 

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. 



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