Turkey: Business confidence tumbles in August
August 27, 2018
The Real Sector Confidence Index published by the Central Bank plunged from 102.7 in July to 96.4 in August, marking the fifth consecutive monthly decline. The drop came during a month which saw the collapse of the lira and escalating concerns of a full-blown financial crisis. The index is now below the 100-point threshold that separates optimism from pessimism among firms for the first time since January 2017.
The deterioration came on the back of falling confidence in all sub-categories. Firms grew more pessimistic about their current and future business situation, with expectations for output, employment and exports over the next three months worsening sharply.
In terms of prices, firms’ inflation expectations for the next 12 months continued to soar, reaching 17.0%. Inflation expectations have now risen almost uninterruptedly since the start of 2018, and their impact on price-setting behavior presents a major challenge for the Central Bank in its efforts to rein in inflation.
Turkey Fixed Investment Forecast
Last month, FocusEconomics Consensus Forecast panelists saw fixed investment expanding 4.6% in 2018 and 3.0% in 2019. A new Forecast will be published on 4 September.
Author: Oliver Reynolds, Economist