Turkey consumer confidence at lowest in more than six years on political worries

ISTANBUL - Reuters

Turkish consumer confidence fell to its lowest in more than six years in August, official data showed on Aug. 21, bruised by political uncertainty, mounting militant violence in the southeast and the Turkish Lira’s tumble to a record low.

Foreign investor confidence in Turkey’s $870 billion economy has unraveled after Prime Minister Ahmet Davutoğlu this week failed to find a coalition partner to form a government with his Justice and Development Party (AKP). 

Now Turkey looks set for a snap election in November and investors fear the result will be the same as June’s vote - no clear majority for the AKP, and more uncertainty. The data from the Turkish Statistics Institute (TÜİK) suggests that, like foreign investors, Turkish consumers are feeling despair.

“When we look at the details of the consumer confidence index we see a broad deterioration,” said Özgür Altuğ, chief economist at BGC Partners in Istanbul.

“Ongoing political uncertainty and terrorist actions probably affected consumer confidence and further decline is likely, in our view.”

The consumer confidence index fell to 62.35 points in August, down from 64.66 in July, the data showed. That was the lowest since March 2009, when it hit 61.55.

The index indicates an optimistic outlook when it is above 100 and a pessimistic outlook when below 100.

Ankara has been caught up in rising violence in the mostly Kurdish southeast and has increased its push against Islamic State of Iraq and the Levant (ISIL) in Syria.

The Turkish Lira, one of the worst performing emerging market currencies this year, is down 20 percent.