According to data released yesterday by the Turkish Statistical Institute (TÜİK), the consumer confidence index fell 5.4 percent in March and decreased to 64.4 points from 68.6 percent the previous month.
Consumers are worried about their finances and the economy. This was reflected in the financial situation expectation of the household index, which decreased by 1.6 percent compared to the previous month, and the general economic situation expectation index fell 5 percent. Consumers are also concerned about unemployment, with that index dropping 6.3 percent. But all of the indexes remained close to the 100-point level, which indicates an "optimistic outlook," the statement said. Turkish lira volatility and economic growth fears have rattled consumers, analysts said.
Renaissance Capital analyst, Michael Harris, said on Friday in a note that although the recent delay of an interest rate rise in the U.S. supported the Turkish lira, it has still lost close to 10 percent of its value against the dollar since the beginning of the year.
Atilla Yeşilada, an economist with Global Source Partners in Istanbul, commented on Monday before the index report was released, saying "[T]he unemployment rate edged down to 10.4 percent in December from 10.6 percent a month earlier, and judging from the behavior of the absolute number of unemployed people, which has also begun to come down, the worst on the unemployment front appears to have been left behind." But it takes time for changes in the unemployment picture to become perceptible to the general public, Yeşilada noted.
The domestic demand is still slack, perhaps partially as a result of the lack of consumer confidence. The share of household final consumption expenditure in gross domestic product was 71.2 in 2013, 70.5 in 2014 and has not risen markedly since. It will also take some time for the reduction in energy expenditures due to low oil prices to reach the pockets of consumers, analysts pointed out. A majority of analysts predicted an upturn in consumer confidence in the near future, particularly as revenue from tourism begins to increase with the warmer weather.