The Turkish economy in summer 2015: catching a cold when it’s warm?
In summer 2015, the Turkish economy failed to send optimistic signals to investors, with its microeconomic institutions in particular going through an unpleasant period, which at times almost resembled economic crisis. It appears political risks emerging as a result of the June 7 general election had a negative impact on already worsening trends in microeconomic indicators such as economic confidence and industrial production indices This piece aims to shed light on the current outlook of Turkey’s real sector dynamics by looking at the economic confidence index, including sub-indices and industrial production and tourism figures.
ECONOMIC CONFIDENCE INDEX
Microeconomic actors are the backbone of economic activity within a country. There is no doubt that their individual strength and the confidence they give to market dynamics stimulates economic growth and development. Accordingly, when economic activity at the business and household level slows, macroeconomic indicators soon tend to move toward a contractionary phase. That is to say, macroeconomic stability and expansion are directly linked to the performance of microeconomic actors.
Figure 1 gives an idea of how firms and households evaluate the current circumstances in the market. Although the downward slope in the economic confidence index between January and March later improved, there was a roughly 10 percent decrease over the course of the first eight months of 2015.