Turks more pessimistic than during currency crisis
Turkey’s consumer confidence edged up this month, but data showed it still remains below levels observed in the aftermath of a currency crisis last August.
Consumer confidence rose to 58.3 from 56.5 in July, the Turkish Statistical Institute said on its website on Thursday. Any figure below 100 for the index indicates pessimism about the future.
Confidence among consumers has averaged 56.9 over the last four months, below the average of 59.1 registered in the aftermath of the currency crisis from September to December last year, official data shows. It had stood at 68.2 in August 2018, when the lira slumped to a record low against major currencies.
The data underscores the task facing President Recep Tayyip Erdoğan’s government in restoring healthy economic growth in Turkey, which is traditionally driven by consumer spending. His ruling Justice and Development Party (AKP) suffered losses at local elections that concluded in June with a re-run of a vote for Istanbul mayor. Voters had fretted about the state of the economy and the government’s ability to restore stability, opinion polls at the time showed.
Turkey’s economy entered a recession in the second half of last year, only to emerge in the first quarter of 2019 thanks to a government spending splurge and help from cheap lending by state-run banks. Erdoğan and Treasury and Finance Minister Berat Albayrak, the president’s son-in-law, say the worst of the economic downturn is over and the economy will grow on an annual basis this year.
But business confidence also remains suppressed, house prices are falling in real terms and industrial output has been declining for 10-straight months on an annual basis.
Unemployment in Turkey stood at 12.8 percent in the three months to June, 3.1 percentage points higher than it was a year earlier, the statistics institute reported last week. Youth unemployment has surged to 23.3 percent from 17.8 percent.
At the start of August, state-run banks announced a latest programme of borrowing incentives for businesses and consumers. They slashed lending rates on mortgages by one third to 0.99 percent monthly and reduced borrowing costs for consumer and business loans as well. The move followed a decision by the central bank to cut its benchmark interest rate to 19.75 percent from 24 percent, where it had remained since October.
Erdoğan replaced the governor of the central bank in July after he failed to respond to a government call to lower interest rates to support an economic revival.