The economic confidence index in Turkey, which was 100.1 in July, rose to 100.8 in August. The increase in the economic confidence index stemmed from the increases in the real sector (manufacturing industry), services, retail trade and construction sector confidence indices. While the real sector confidence index rose to 112.2 in August, the confidence index for the services sector rose to 116.1, the retail trade confidence index to 110.3 and the construction sector confidence index to 92.4. Consumer confidence index decreased to 78.2.
The recovery of the period in which the turbulence effect of the Covid-19 pandemic caused a significant contraction in the economy and in the sectors continues. While the economic openings, together with the easing of quarantine measures and the effects of vaccination, affect the activity positively, the uncertainty about the future of the epidemic is an element of timidity. Regarding this; The spread of new variants, especially delta, poses a downside risk. However, economic activity maintains its strong trend throughout the year and sector dynamics are in the phase of reaching pre-pandemic levels.
In the service sector, where the most significant changes and effects are seen, we have seen very harsh reflections, especially in terms of combating the epidemic in social terms. This, in turn, caused the sector’s activity to stagnate during the closing periods. Currently, the revival effect in the service and relative sectors, together with the opening effect, is based on the openness of the economy and the activeness of social life. When we add the business lines related to travel and tourism to this, the area covered by the sector for the economy becomes quite significant. Since the capacity of individuals to spend is also very related to the labor supply, it can be mentioned that there is a bilateral relationship from the economy to the sector and from the sector to the economy in general. Although we see the progress in vaccination and opening up in the economy positive for the service sector, we think that the Delta variant and the increasing number of cases pose a risk.
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. For this reason, the retail trade sector varies within itself due to the preference changes of individuals depending on periods and conditions.
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. Although the movement in housing loans was fast in the 2Q20 and 3Q20 periods, a similar movement is not expected in these conditions due to the current interest rates in the retail loan group. Although high inflation is an obstacle to the decrease in interest rates, we may see limited interest rate cuts in this area in the 4Q21 period. The macroprudential measures implemented in the context of reducing the inflation-increasing effect of demand indicate that the weight in loans is intended to be shifted from retail loans to commercial and corporate loans. Considering that housing and rent inflation tends to increase due to the effect of building costs, if there are loan campaigns to increase the demand for housing loans, it will not help inflation much.
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 Delta variant should be followed as suppressors in general economic activity.
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Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
