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Turkey Business Confidence February 2020

Turkey: Business confidence reaches near-two-year high in February

Turkish firms continued to be more optimistic early this year, with the business confidence index rising from 104.1 in January to 106.9 in February, marking a 21-month high. The result reflected more optimism surrounding output, employment and export order expectations in the three months ahead, and order books over the past three months. Moreover, firms grew more optimistic regarding fixed investment expenditure, likely reflecting the strong easing cycle of the Central Bank making credit cheap as real interest rates have entered negative territory. However, views on current orders and stocks of finished goods remained downbeat in the month.

Inflation expectations for the next twelve months, meanwhile, were relatively unchanged at 13.1% in February (January: 13.3%); however, the figure marked the lowest print since May 2018. Looking ahead, FocusEconomics Consensus Forecast panelists expect inflation in Turkey to remain in double-digit territory this year despite easing somewhat owing to a supportive base effect. Twin deficits, a weaker currency and the government’s focus on boosting economic growth through cheap credit cloud the inflation outlook.

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