Voice and exit

After falling drastically in April, all confidence indices jump-started in May – economic confidence, for instance, from 51 to 61. The feeling that the worst is behind us might be spreading.

Yet this is a feeling only. It all depends on roll-over ratios the ability to pay FX debt instalments . Nonetheless, there is also a grain of actual fact supporting it. By far, manufacturing has posted the highest increase – 11.2 points. Could manufacturing be wrong in guesstimating business plans? We should look at the turnover index next.

Should manufacturing growth endure, and consumer durables post higher growth rates, industrial production would ratchet up. TRY interest rates can indeed be the short-term key.

One can say with some confidence that although earnings are stagnating, the credit channel has worked so far. The index concurs with the view that lending has been effective in Q2.

Take this out from the diagram, and you come up with a largely sub-standard index. I think Q3 will not follow Q2. It will be better because businesses will gradually open.

There are two options for H2 2020. Primo, a huge capital inflow in whatever form will save the day, even swaps; and secondo, exports will boom anew. Neither is realistic though.