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Turkey Business Confidence January 2020

Turkey: Business confidence rises in January

Turkish firms opened the new year with greater confidence levels, as the business confidence index rose from 103.6 in December to 104.1 in January, a nine-month high. The result was driven by more upbeat views on output, employment levels and export orders in the three months ahead. On the other hand, views on current order books and stocks of finished deteriorated, while sentiment regarding the inflow of orders in the past three months became less upbeat. Moreover, the general business situation according to firms improved notably in the month; however, plans to increase fixed investment expenditure moderated somewhat.

Inflation expectations for the next twelve months, meanwhile, remained notably above the Central Bank’s target of 8.2% by end-2020 at 13.3% in January (December: 14.0%). This marked, however, the lowest expected level since May 2018 as expectations moderated for the eight consecutive month. Looking ahead, FocusEconomics Consensus Forecast panelists expect Turkish inflation to remain in double-digits despite moderating somewhat owing to a supportive base effect. Twin deficits, a weaker currency and the government’s focus on boosting economic growth—which it will likely prioritize over bringing down inflation—cloud the inflation outlook.

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