Surprise Suprise: Turkish consumer confidence plunges
According to preliminary figures released this morning, Turkish business channel CNBC-e’s preliminary consumer confidence index plunged in January. Well, “plunged’ may be an understatement, but I couldn’t find a stronger word. See for yourself:
The graph has the main index as well as the two sub-indices: Consumer expectation is based on the forward-looking questions of the survey from which the index is derived, whereas consumer sentiment measures the appetite to buy durables. It is clear that the plunge in the headline index was mainly as a result of the sharp fall in sentiment, which is incidentally the most volatile of the three.
Before you hastily conclude that consumption froze because of the political crisis in Turkey, I should tell you that there are other factors at play here as well. First, the new credit card measures, which were put in place at the beginning of the month, could have driven down confidence. Another factor is seasonality: As you can see in the graph below, consumer confidence usually falls in January.
The credit card measures were actually announced at the end of November, in effect accentuating the seasonality. But no wonder the political crisis played an important part as well, so you were probably right in jumping to conclusions:):):)
What could this mean going forward? I obviously was not expecting strong domestic demand this year even before the graft scandal erupted. But if the political crisis continues, growth could come lower than the 3 percent I am expecting…
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