Turkey Growth Confidence Falls

Confidence in Turkey’s economy weakened among consumers and businesses in December, according to the Turkish Statistical Institute Thursday. The economic confidence index decreased by 18.5% in December, TurkStat said in a statement.

“This decrease in the economic confidence index stemmed from the decrease in consumer, real sector and service confidence indices,” the statement said, Anadolu Agency reported.

The sub-index tracking consumer confidence fell by 8% last month to 63.38. The sub-index for the real sector dropped by 3.7% to 103.60 in January, and that of services fell by 3.5% to 93.35. However, for retail trade, the reading for confidence increased slightly by 0.1% to 96.13 and the construction confidence index went up by 0.5%.

Driven largely by public spending and domestic consumption, Turkey’s economy was expected to grow by 3.1% in the year, according to World Bank statistics. The economic confidence index is seen as a significant reading of the economic course as it is a composite index that aggregates sub-indices of consumer confidence, real sector services, retail trade and construction confidence indices, reflecting an overall sentiment of health of the economy.

It was the lowest level since the institute began compiling data in January 2012. The index indicates an optimistic economic outlook when above 100 and a pessimistic one when below 100. In November, the index had risen 7.4% to 86.55.

Negative sentiment towards Turkey has been reflected in sharp declines in the lira’s value this year, with the currency dropping as much as 19% against the dollar. It was at 3.534 on Thursday compared with 2.918 at the end of 2015.

Separately, the labor minister told reporters that Turkey will increase the minimum wage by about 8% next year to a monthly net minimum wage of 1,404 lira ($397). Consumer price inflation is forecast to be just over 8% at the end of next year, according to a central bank survey.

Meanwhile, the tourism ministry said on Thursday that the number of foreign visitors arriving in Turkey dropped 21.35% to 1.35 million in November.