The economic confidence index in Turkey, which was 100.8 in August, rose to 102.4 in September. The increase in the economic confidence index stemmed from the increases in the consumer, real sector (manufacturing industry), services and retail trade sector confidence indices. While the consumer confidence index rose to 79.7 in September, the real sector confidence index was 113.3, the services confidence index was 117.8 and the retail trade confidence index was 115.6. Construction sector confidence index decreased to 91.8.

 

While it is hoped that the effects of the Covid-19 pandemic will ease within the framework of vaccine developments in the recent period, it is observed that the phase of leaving behind the effects of the sharp contraction of 2020 is preserved. With the effect of increasing sectoral activities especially after the opening period, efforts to return economic activity to the pre-pandemic period continue. The quarantine measures implemented during and after the pandemic period, when the epidemic increased numerically, had a shrinking effect in certain sectors, especially in services. In the confidence indices, the normalization steps taken after the partial and full closure periods provided a significant recovery. On the other hand, there is more optimism than before, regarding the easing of the economic activity effects of the epidemic together with vaccination.

 

While the consumer confidence index continued its course below the general baseline value of 100 on the basis of both headlines and most of the sub-indices, it is observed that there was a certain increase compared to August. In the service sector, we observe a rapid rebound effect in the opening period, after the pandemic-induced closures caused a significant contraction. However, the pandemic element can always be a source of reservation for the sector. Although the effects of the Delta variant and the increasing number of cases globally in the recent period are limited, they need to be monitored in terms of potential restrictions.

 

In the retail sector, in addition to the effect of defensive food expenditures during the pandemic period, the periods in which the epidemic effect eased also had a positive effect on discretionary expenditures. There may be different reactions in retail subgroups, depending on the level of elasticity of demand and the distinction between online and physical sales. While the acceleration of the pandemic effect highlights defensive expenditures, it may throw discretionary expenditures into the background. The same rotation applies to online and physical merchandising as well.

 

As the sector most heavily affected by financial conditions, we think that the interest rates and, accordingly, the situation in financial conditions will be determinant on the construction sector. The movement in housing loans was rapid in the 2Q20 and 3Q20 periods. Although high inflation is a barrier to a rapid decline in interest rates; The 100 basis point rate cut by the Central Bank at its September meeting indicates that the same cycle may continue in the following months. We have to monitor the effect of the Central Bank's interest policy on loan costs and the price movements of the building materials plus demand-driven sector.

 

The real sector confidence index is at pre-pandemic levels with the strong course of economic activity. In the real sector activity, similarly, the effect of recovery from the bottom of the Covid-19 pandemic continues, in line with the economy in general. The index, which bottomed out in April 2020, is hovering above the 100 threshold that it crossed in August 2020. Similarly; While seeing positive factors such as economic opening, increasing production trends due to the movement in domestic and foreign demand, vaccination; We think that factors such as the trend in the number of cases should be followed as suppressors in general economic activity.

Kaynak Tera Yatırım-Enver Erkan
Hibya Haber Ajansı