Turkey: Business confidence improves throughout the first quarter
March 22, 2018
Business sentiment improved for a third consecutive month in March, rounding off a strong first-quarter performance and suggesting resilient growth momentum early in the year. The Real Sector Confidence Index published by the Central Bank rose from 110.8 in February to 111.9 in March, the highest figure since last June. As a result, the index sits further above the 100-point threshold that separates optimism from pessimism among firms, where it has been for slightly above a year.
A more upbeat assessment of incoming business buttressed March’s figure, with firms’ more positive views on output and export orders in the next three months accounting for most of the improvement this month. Notably, companies were also much more optimistic regarding capital outlays, which likely fueled strong private fixed investment in the first quarter. These developments more than offset a more downbeat assessment of current new orders and current stocks, while firms’ views on employment in the next three months was also a tad less positive.
On a less positive note, the differential between firms that expected higher input prices and those that expected lower input prices widened in March after narrowing to a four-month low in February, suggesting that companies remain wary of elevated price pressures. That said, their views on selling prices in the next three months was slightly more positive in March, which points to potentially larger operational margins in upcoming months.
Author: David Ampudia, Economist