Confidence in the Turkish economy surged 23.6% in January compared to the same period last year and hit the highest level in the last 20 months at 97.1 points, data from the Turkish Statistical Institute (TurkStat) revealed Wednesday. The index was measured at 96.5 points in December and 78.5 points in January 2019.
The rise in the economic confidence index was driven by three sub-readings of the data, namely construction, services and retail trade consumer confidence indices.
The construction confidence index was the best performer in the month surging 14.6% and reached 78.9 points. The services and retail trade confidence indexes both were up 2.2% month-on-month in January. The former index reached 95.2 points and the latter hit 105 points – the highest level in the last two years.
The consumer confidence index showed a slight improvement of 0.1% compared to December. However, confidence in the real sector index slipped 2.1% during the same period.
The economic confidence index surveys consumers' and producers' evaluations, expectations and tendencies about the general economic situation.
In early 2018, the economic confidence index stood at 105.2 points, according to the TurkStat data. In the aftermath of the high currency volatility, geopolitical developments and global trade wars, the index began the retreat and dipped to 75.2 points in October 2018.
The measures implemented by the economic administration have ensured a significant decrease in interest rates and inflation, and the relatively mitigated geopolitical risks have boosted confidence in Turkish assets and enabled an upward trend in the economic confidence index.
Upward trend in the months to come
A1 Capital Investment Securities Research Analyst Aylin Cevizci told Anadolu Agency (AA) yesterday that the increase in economic confidence at the beginning of the year is a positive development. "On the sectoral breakdown, the confidence index in the construction sector stands out. The fundamental reason for the high rise in the construction index is the nationwide campaigns in the property sector, the fall in the mortgage loans and increasing demand on loans," Cevizci explained. The resumption of construction on incomplete projects has become one of the developments that revived the activity in the sector, she added, noting, "We expect that the upward momentum will continue in the upcoming months."
The improvement in the retail and services sector and the rising confidence in the consumers' confidence are the results of the signals for a better macroeconomic outlook, she noted. Cevizci stressed that there are no macro or political expectations that would deteriorate the confidence indices in the Turkish economy.
"The economic process that will be guided under the principle of discipline strategy will continue to positively reflect on the confidence indices," she said. The improvement trend in the Turkish economy will be maintained so long as the geopolitical risks, the political developments in the global outlook and the recent news of contagion do not have long-term impacts on the economic processes across the world, she noted. "The stability in the exchange rates, predictability in inflation and the empowered investment psychology have affected the improvement in the data of the confidence index," she concluded.