Confidence in emerging markets rises elsewhere, dips in Turkey
Consumer confidence across a core group of emerging markets has improved since a year ago as the global economic outlook has brightened, local stock markets have risen and pressure has eased on countries sensitive to commodity prices, according to the Credit Suisse Research Institute’s seventh annual Emerging Consumer Survey.
However, the report shows that while confidence has improved across this group of countries in aggregate, a sharp divergence emerged between the most optimistic consumers who reside in the major Asian economies and those in Turkey and Mexico, where geopolitical factors have contributed to a slide in confidence. Despite these contrasts, a change in the nature of consumption driven by a rapidly growing middle class in emerging economies remains on track, the report said.
The following are the report’s key findings on Turkey:
• Turkey has dropped two places to sixth in the report’s country scorecard of consumer confidence and shares the lowest rung with Russia and Mexico.
• The net percentage of Turkish respondents expect their personal finances to increase over the next six months moved into negative territory at minus 2 percent versus 10 percent in 2015, well below the survey average of 20 percent.
• Lower income groups remain more pessimistic about their wage expectations. The year-on-year deterioration in Turkey deepened due to the high base effect of the previous year when the government introduced a one-off 30 percent increase in the minimum wage, compared with 8 percent for 2017.
• Higher unemployment in Turkey since April 2016 does not support income expectations either. The recorded consumption of lesspenetrated discretionary items remained positive in this year’s survey, evident from the increase in spending on cosmetics, smartphones, travel and cars.
• This year may prove to be relatively less favorable for discretionary spending in
Turkey. Not only has consumer confidence been notably weaker lately, but also many discretionary items, particularly cars, smartphones, and cosmetics, have high import ratios and are exposed to potential price inflation.