Consumer confidence declines for third consecutive month amid geopolitical risks

ANKARA

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Turkey’s consumer confidence index continued to decline in February amid escalating geopolitical risks as the index saw a 7 percent of drop compared to January. 

The index fell to 66.64 points in February, down 4.98 points, or seven percent, from January, showed data from the Turkish Statistics Institute (TÜİK) on Feb. 19.  

New data showed that a downward trend in consumer confidence which started in December has continued. 

The index increased sharply in November 2015 after the elections to its highest level since April 2014, as consumers’ positive expectations rose about the general economic outlook after the Justice and Development Party (AKP) regained its parliamentary majority, according to analysts.

The index has, however, started to decline in the following months. 

Finansbank economist Gökçe Çelik said the three-month decline has been around 13.6 percent.
 
“We have seen that the speed recovery in the consumer index just after the November 2015 elections has now reversed. I believe specifically rising geopolitical and security risks have played a big role in this plunging trend,” said Çelik, as quoted by Reuters. 

The worst deterioration among sub-indices was in the probability-of-saving index in February, suggesting less and less people expect to save money. The sub-index dipped 16.1 percent to 21.05 points.  Worries about employment were another negative element in consumer confidence as the number-of-people-unemployed expectation index was down 10.1 percent to 66.17 points, according to TÜİK data. General economic confidence also dropped by 5.9 percent in February. The financial-situation-expectation index was the least negatively affected, as it fell 3.1 percent.

The index indicates an optimistic outlook when the index is above 100, but it indicates a pessimistic outlook when it is below 100.

“The sub-indexes about the households’ own financial situation and consumption expectations have continued to remain more optimistic than other indexes which are about the general macroeconomic outlook…We have however seen a deteriorating trend in more sub-indexes in February than we had in earlier months. If this trend continues, the consumer spending and the economic growth will likely to go downward,” added Çelik.