Turkey: Business confidence jumps in February but remains pessimistic
February 22, 2019
The Real Sector Confidence Index published by the Central Bank increased from 93.0 in January to 97.2 in February, the second consecutive monthly improvement. As a result, the index moved closer to the 100-point threshold that separates optimism from pessimism among firms.
The rise came on the back of greater optimism regarding the current general business situation, and output, employment and exports over the next three months. However, firms grew gloomier about current orders, evidence that business conditions remain difficult for Turkish firms as the economy continues to reel from the aftereffects of last year’s currency crisis.
In terms of prices, firms’ inflation expectations for the next 12 months moderated for the fourth straight month, from 23.4% in January to 23.2% in February. This is likely the result of tighter monetary policy, weak domestic demand, a more stable lira and lower oil prices. A further fall in inflation expectations going forward—which will feed through to price-setting behavior—will be key to returning inflation to more manageable levels.
Turkey Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment contracting 7.0% in 2019, before expanding 2.8% in 2020.
Author: Oliver Reynolds, Economist