The COVID-19 impact on confidence indices
Labor force, current account balance, and industrial production data were the main discussion points of last week. Labor force data has not been hit by the coronavirus outbreak yet, but we’ve begun to feel the impact of the virus on the current account balance and industrial production index. On the other hand, industrial production data signaled five percent economic growth in the first quarter of the year.
Confidence indices will be the key data this week. Turkish Statistical Institute (TurkStat) will first announce the consumer confidence index and then the real sector and sectoral confidence indices. In April, all the indices experienced a significant decline.
According to seasonally-adjusted data, the services confidence index recorded the lowest decrease last month at 50.2 percent compared to March. Construction, retail and industrial sectors fell by 42.1 percent, 26.1 percent, and 36.8 percent, respectively. Although the consumer confidence index experienced a much softer decline, it decreased to its lowest level.
We’ll observe a weak performance in all indices in May. However, the question is whether May data will be lower than April or not.
Confidence indices measure producers’ trust and consumers’ economic evaluations. The trend of these indices shapes economic growth expectations. That’s why although we will see a solid growth rate in the first quarter of the year, the second quarter signals a contraction.
The May ZEW index will be another important indicator this week. The index, which measures the optimism in the Eurozone for the next six months stood at 25.2 in April. The ZEW index performance is considered a leading indicator for our future exports to the European Union, our biggest export partner.
DATA TO FOLLOW THIS WEEK Wednesday, 10:00 – May Consumer Confidence
Index Friday, 10:00 – May Capacity Utilization Rate Friday 10:00 – May Established and Closed
Companies
Friday, 10:00 – May Sectoral Confidence Indices Friday, 10:00 – May Real Sector Confidence Index