Turkey: Business confidence continues to slide in October, albeit at a reduced rate
October 26, 2018
The Real Sector Confidence Index published by the Central Bank declined from 89.6 in September to 87.6 in October, marking the seventh consecutive monthly decline and a fresh multi-year low. As a result, the index moved further below the 100-point threshold that separates optimism from pessimism among firms.
The deterioration came on the back of falling confidence regarding total current orders; and output, employment and export orders over the next three months. On the other hand, firms rated the general business situation more positively, likely thanks to a period of greater calm in financial and exchange rate markets.
In terms of prices, firms’ inflation expectations for the next 12 months continued to skyrocket, reaching 28.2%. Inflation expectations have now risen almost uninterruptedly since the start of 2018, and their impact on price-setting behavior presents a major challenge for the Central Bank in its efforts to rein in inflation.
Turkey Fixed Investment Forecast
Last month, FocusEconomics Consensus Forecast panelists saw fixed investment contracting 2.9% in 2019 before expanding 3.5% in 2020. A new Consensus Forecast will be published on 30 October.
Author: Oliver Reynolds, Economist