Some more “cool” signs from the Turkish economy…
Not cool, as in “cool world“, but cool as in “the economy is cooling”. At least, that’s what the no-overheating camp took from the the June CNBC-e (yep, the business channel) confidence indices, which were released earlier today:
The main index fell from 107.4 to 105.2. As for the sub-indices, while consumer sentiment, which measures appetite to buy durable goods, fell sharply from 132.8 to 117.8, consumer expectation, which is based on the forward-looking questions, rose to 96.9 from 94.1.
This seems like very good news, until you notice that these indices, and TurkStat’s own index for that matter, are influenced heavily by Turkish asset prices. First, have a look at the graph with the lira:
Note that I reversed the axis for the exchange rate basket (1/2 USDTRY. 1/2 EURTRY) so that a lower number means that the lira is depreciating against the market. Impressive, isn’t it! As for the relationship with equities, it is not as prevalent, but still there, especially during key movements in the ISE.
Believe me, when I first noticed this back in 2009 (yep, I am a bit slow, but in my defense, I wasn’t really into these indices during my think-tank days in Ankara -I was doing more tanking than thinking at the time anyway- or my stint as a market economist), I did run formal regressions as well as causality tests, and I did mention the results in a couple of Hurriyet Daily News columns more than two years ago. So these are much more than nice-looking pictures:)
Anyway,what I mean to say is: I would not jump to hasty conclusions on the economy from Turkish confidence indices…
P.S. to self: By comparing my writing style now to those early columns, I feel that I have come a long way since then. At least, I do not compose long paragraphs anymore.
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