What do the confidence indices say?

Dünya Executive - - COMMENTARY - Alaattin AKTAS Economist

Confidence indices were announced one after the other. The indices show that people on the street and companies cannot draw a clear picture of the future. They’re confused and want to be optimistic, but conditions do not allow it. This is the image...

TurkStat’s consumer confidence index was announced first. It was still very weak. However, in March and April there was an improvemen­t over the previous months. Then last week a series of more confidence indices for April were made available. The Central Bank announced the real sector confidence index, TurkStat an

nounced the services, retail trade and constructi­on sectors confidence indices. We see in the results of the survey that both people and companies are confused, because there is no general trend.

It is clear that this recovery in the consumer confidence index is not due to the rapid recovery of economic conditions. Did the economy show improvemen­t over the last couple of months? No, on the contrary, the economy is on a negative. So what happened so that consumer confidence in the economy increased? The question remains in limbo.

We are of the opinion that the increase in April is due to the fact that the election tension is over. Some may say: “April is not over and the tension due to the latest attacks against the main opposition leader Kilicdarog­lu is still on the agenda.” They are right. But these polls are the result of field work in the first two weeks of the month. So the latest attack and developmen­ts in the aftermath of it have no effect on this survey.

People were relieved to leave the elections behind then suddenly found themselves in a vortex again. Therefore, the consumer’s confidence in the economy, which we believe to be improved by the atmosphere in the country rather than by economic conditions, may fall again.

Real sector’s confidence also increased

The real sector confidence index for April, which was announced by the Central Bank, also indicates an increase. The real sector confidence index increased by 3.4 percentage points to 105.5 in April. The seasonally-adjusted real sector confidence index rose by 0.7 percentage points to 100.0. Real sector confidence increased compared to the previous month but the most crucial question is:

“What is your opinion about the general trend in your industry compared to a month ago?” Responses are given as “more optimistic, the same, more pessimisti­c.” The balance ratio is reached by the optimistic-pessimisti­c difference. The rate of respondent­s who are optimistic about the general course is 10.4 percent in March and 8.2 percent in April.

The ratio of those who said the situation was the same in March and April was 75.1 and 74.3 percent, respective­ly. The percentage of those who say that they are pessimisti­c is 14.5 percent and 17.5 percent respective­ly in March and April. The optimistic-pessimisti­c difference is negative, 4.1 percent in March, 9.3 percent in April. In other words, industrial­ists are saying that the situation is not improving in their business sectors, but in general, things are improving in the industry!

Sectoral confidence indices

The sectoral confidence indices announced by TurkStat also displayed a fluctuatin­g course. The services sector confidence index, which was 81.6 in March, rose to 83.1 in April. The retail trade confidence index has almost remained unchanged. The index, which was 90.7 in March, was 90.6 in April. A similar situation is true for the constructi­on sector confidence index. Constructi­on confidence index fell from 54.1 to 53.9.

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