While the economic confidence index in Turkey was 93.6 in June, it decreased to 93.4 in July. The decrease in the economic confidence index; real sector, services and retail trade sector confidence indices decreased. While the real sector confidence index decreased to 102.5 in July, the confidence index for the services sector became 117.8 and the confidence index for the retail trade sector took the value of 113.4. Consumer confidence index increased to 68 and construction sector confidence index reached 85.
While the economic confidence index passed a significant part of 2021 above the 100 threshold, factors such as the economic progress experienced with vaccine developments and openings, and increased sectoral activity created the process of leaving behind the sharp Covid-19 effects of 2020. In this context, sectoral confidence indices, real sector data and many of the leading indicators have reached pre-epidemic levels, reflecting the effects of recovery.
The consumer confidence index continues its course well below the general 100 basis value, both on the basis of headlines and most of the sub-indices. The main reasons for low consumer confidence are the increasing uncertainties in the face of inflation and price instability and the erosion of the purchasing power of households. In 2020, while the pandemic restrictions were the main reason for the shift in consumer preferences and spending trends, in 2021 the normalization of activity and the lifted restrictions were the main source of relief. In 2022, the weakening of the income effect in the face of inflation and the additional effects of the continuous depreciation of the TRY cause a sustainable balance in the purchasing and consumption preferences of individuals.
After the epidemic-induced closures in the service sector caused a significant contraction in the 2020-21 period, we observed the rapid turnaround effect and the start-up of service sector businesses such as restaurants, bars, cafes and hotels in the opening period. Loosening the measures and working at full capacity due to the epidemic, which has lost its effect, supports the mobility here.
In the retail sector, in addition to the effect of food expenditures during the pandemic period, the periods when the effect of the epidemic eased also had a positive effect on discretionary expenditures. The recent TRY price developments, on the other hand, will be subject to different reflections on the axis of domestic demand and foreign demand. In terms of discretionary expenditures, domestic demand will create negative effects due to the weighting of basic consumption preferences, while the positive trend will continue due to the lack of food and food/retail demand elasticity.
As the sector most affected by financial conditions, we think that interest rates and financial conditions will determine the construction sector. The movement in housing loans was rapid in the 2Q20 and 3Q20 periods due to the interest rate cuts. With the CBRT's loose monetary policy stance, it is aimed to shape loan rates around the policy rate, once again within the framework of recurring growth perspective, and it is tried to ensure that loans are used in a sectoral manner.
The real sector confidence index is at pre-Covid-19 pandemic levels with the strong course of economic activity. While seeing positive factors such as economic expansion, increasing production trends due to the mobility in domestic and foreign demand, vaccination; We also find factors such as increasing production costs as a suppressor in general economic activity and high market interest rates in terms of investment trends as negative. The increase in exchange rates and the effect of the high course of inflation are the main reasons for the loss of momentum in the last few months. Although the point of view of the economy management is in the direction of growth in production and industry, the effect of the decisions taken to control foreign exchange and inflation on loans causes restrictive situations for the sector.
Kaynak Enver Erkan / Tera Yatırım
Hibya Haber Ajansı