Turkey: Slowdown or Not
Yesterday’s October Business Tendency Survey is rather confusing:
So while the real sector confidence index, or RSCI, has fallen, capacity utilization rate, or CUR, continues to look strong. But the devil is in the details, so let’s start by looking at the subcomponents of RSCI:
The fall in RSCI seems to have stemmed from worries about the future, which is not surprising given the impending recession in Europe, let alone the sovereign-banking crisis. Also noteworthy is the inventory build-up. So we could argue that the resilience in CUR is partly due to firms building inventories.
Speaking of the CUR, the rise seems to have come from mainly consumption goods, especially non-durables, and food & beverages…
…which is contradicting earlier indicators pointing to sharp slowdown in consumption. But it is tough to interpret CUR: If firms are cutting on capacity investment, for example, you would see CUR improving for a while.
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