Turkey: Business confidence moves back into positive territory in March
March 25, 2019
The Real Sector Confidence Index published by the Central Bank increased from 97.2 in February to 102.1 in March, the third consecutive monthly improvement. As a result, the index moved above the 100-point threshold that separates optimism from pessimism among firms for the first time since July 2018. The rise came on the back of greater optimism regarding the general business situation, current orders, and output, employment and exports over the next three months.
In terms of prices, firms’ inflation expectations for the next 12 months moderated for the fifth straight month, from 23.2% in February to 22.6% in March. This is likely the result of tighter monetary policy, weak domestic demand and a more stable lira. 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 5.9% in 2019, before expanding 3.0% in 2020.
Author: Oliver Reynolds, Economist