Consumer Confidence Tumbles

Despite the ongoing still-decent GDP growth, the economic outlook of Turkey is not in brilliant shape. Following a robust start to 2015 for the economy, the current focus of consumers in view of economics developments in predominantly on general domestic conditions and clearly there are negative signs in these areas.

The mood of consumers in Turkey is more pessimistic according to the data released by Turkish central bank in September’s Survey of Consumer Confidence. The overall indicator providing the numerical information about the consumers’ expectations was down by 3.9 points to 58.5 which was the lowest figure recorded since January 2009. Moreover, Turkey posted a reading below 60 only three times in the past (between November 2008 and January 2009), in other words consumer confidence is not that far from hitting its all-time low.

The economic expectations index also hit an all-time low in September at 72.0. The index averagely fell by 8% in the past two months.

Turkey - Consumer Confidence Chart

Given the higher political risks ahead of the elections, further potential lira weakness, and the restart of violence in the southeastern part of the country, one would not expect the mood of consumer to be boosted after all.

Turkey - Propensity to Save and Bond Yields

We find something very interesting in the chart above as it provides information about the relationship between propensity to save and Turkey benchmark bond (2-year) yield. Apparently, the index had worked out greatly as a pre-indicator for rates in the debt market until early this years, however the two series clearly have moved different way since then. Ultimately, average Turkish citizen is likely to face important challenges in a struggling economy before they return to non-crisis consumption patterns.