Turkish consumer confidence index falls in December

ANKARA - Anadolu Agency

Turkey’s consumer confidence index fell in December after a sharp increase in November, the Turkish Statistics Institute (TÜİK) said in a report on Dec. 21.

The index fell to 73.58 in December from 77.15 in November, according to the report.

The index had jumped to a high reading in November from 62.78 in October.

Worries about employment seemed to have been predominant, as the number of people in the unemployed expectation index decreased by 7.4 percent compared with the previous month.

General economic confidence also dropped by 5.6 percent in December, the report said. However, confidence in savings improved, as the probability of savings index was up 1.9 percent.

A better performance by the Turkish Lira may help confidence improve in the near future, according to analysts. Since the U.S. Federal Reserve (Fed) raised interest rates on Dec. 16, the lira has been rising against the dollar, from about 2.96 to the dollar before the rate hike to about 2.91 on Dec. 21.

“We see durability in the Turkish economy still with good growth drivers, a pickup in exports to the EU, a cheap currency, sound public finances and banks and favorable demographics, all helped by low oil and commodity prices,” commented Timothy Ash, a credit strategist at investment bank Nomura in London in a note published last week.

Turkey’s Gross Domestic Product is one of the strongest among emerging markets, at an annual rate of 4 percent, according to a report by TÜİK released earlier this month.

In its most recent inflation report, the Turkish Central Bank said rising food prices were one of the most important inflationary pressures but they were beginning to fall back. The report noted inflation has been stabilizing in Turkey for the past six months.

With inflation stabilizing, domestic demand continues to drive economic growth in Turkey, according to analysts. 

 Consumer spending in Turkey increased to 22.6 million liras ($7.8 million) in the third quarter of 2015 from 21 million liras ($7.3 million) in the second quarter of 2015, according to Trading Economics. Turkish consumers spent about $453.6 million in 2014, compared with $447.7 million the previous year.

“Moreover, the planned increase in the minimum wage to 1,300 Turkish liras per month will support further consumer spending, along with a substantial fiscal stimulus package that the new government has promised,” commented Bora Tamer Yılmaz, an economist at Ziraat Securities in Istanbul.