Turkey: Business sentiment drops in July
July 25, 2019
Business confidence dropped markedly from 102.5 in June to 98.3 in July, opening the third quarter on a sour note. The deterioration in sentiment came on the back of worsening outlooks for production and overall order books—due to both weakening domestic and export new orders—over the past three months and currently, as well as easing confidence regarding export orders in the next three months. However, a more upbeat view on production and employment in the three months ahead cushioned the fall in sentiment somewhat.
Meanwhile, inflation expectations eased for the third month running in July, with firms expecting inflation to moderate from 22.7% to 21.6%. Inflation expectations remained elevated, however, and are likely influenced by the ongoing weakness in the currency—on 24 July, the lira depreciated 7.4% against the US dollar in year-to-date terms. However, in recent weeks the lira has shown resilience amid rising geopolitical tensions.
Author: Jan Lammersen, Economist