All eyes on confidence indices
that consumer confidence rose to a record-high in the LAST WEEK WE SAW last two and a half years. This is a positive development. But the rise in confidence is not the only good thing about this data. While three out of four indices (financial situation of the household index, financial situation expectation of household index in the next 12 months and the general economic situation expectation in the next 12 months) increased, the decline in the fourth index (assessment of spending money on durable goods in the next 12 months) should also be noted. During the C•VID-19 peak, the assessment on spending money on durable goods did not decrease but rather increased, despite the persistent decline in the other sub-indices.
The current decrease in the assessment on spending money on durable goods indicates that loan growth, which sharply rose in the second half of 2020 and gradually retreated recently, has decelerated consumption. It’s a positive picture in terms of inflation, current account deficit and the borrowing trend. It will be beneficial if this trend continues in the next few months in terms of the general economic balance.
The real sector, services, trade and construction confidence indices are some of the most important data to be announced this week. We are seeing stronger optimism with the ease of financial stress. I expect this to positively reflect on the sectors. There’s a small decrease in the construction sector confidence index due to the slowdown in sales. We may see this trend continue in the next months.
The services sector is weaker than other sectors due to the pandemic. We may see a gradual recovery in the services sector confidence as social restrictions begin to be lifted, based on President Erdogan’s remarks. The real sector (industry) confidence index has been performing well lately. There isn’t any upcoming risk regarding this sector. The expectation of a rise in exports in 2021 will support the rise in industrial production.
The January tourism data will be revealed on Monday morning. The number of tourists visiting Turkey decreased by 69% in 2020. We will see this steep decline continue in the January and February data. With the base effect and the contribution of real recovery, there might be a rise in the number of tourists as of March. The Ministry of Culture and Tourism expect the number of tourists to reach 31 million in 2021, up from 15.8 million in 2020.