Automotive Exports December 2019

Economic confidence reaches 15-month high
The economic confidence index
increased by 14.7 points in October
compared to the same month of the
previous year, reaching 89.8 – the
highest in the last 15 months, according
to the data of the Turkish Statistical
Institute (TurkStat) released.
The economic confidence index – a
composite index that summarizes
the general economic situation,
expectations and trends of consumers
and producers – stood at 105.2 at the
beginning of last year. The index fell
to 75.2 in June 2018 as a result of
currency volatility, geopolitical risks
and diplomatic developments.
Commenting on the data, Treasury
and Finance Minister Berat Albayrak
said on his Twitter account the strong
recovery in the markets continues, as
shown by the improvement in all the
confidence metrics. “The momentum
we have achieved in this field will be
one of the driving forces of the change
and sustainable growth we desire,” he
added.
To restore the economic confidence,
the government and relevant state
agencies have introduced and
implemented several measures to
stabilize the tailspin in the economic
activity, thereby launching an economic
balancing period.
The decline in interest rates and singledigit
inflation after a long break and
reduced geopolitical risks increased
confidence in Turkish lira assets,
which was reflected in the economic
confidence index.
According to the Turkish Statistical
Institute (TurkStat), the economic
confidence index rose by 3.8 points
in October compared to the previous
month.
The recovery in the economy also
manifested itself in the real sector
confidence index. The real sector
confidence index increased by 2.1
points to 100.9 in October compared to
the previous month.
The seasonally adjusted real sector
confidence index, on the other hand,
saw an increase of 4.5 percentage
points to 104.2 in October, reaching the
highest level in 17 months.
The positive expectations for the future
from both consumers and producers
increased, while the sub-indices used
in the calculation of the economic
confidence index surged.
The index value, which represented the
production volume in the next three
months, reached the highest level in 20
months in October at 118.8.
Expectations that employment and
export orders would increase in the
next three months also improved.
Meanwhile, the impact of the housing
loan interest rates, which reduced
under the leadership of the public
banks, on the construction sector was
reflected in the construction sector
confidence index. The index rose to
65.1 in October, the highest level since
September 2018.
Revival in the automotive sector
Integral Investment Research Director
Tuncay Turşucu said the economic
confidence index increased by 4.5%
in October compared to the previous
month and hit 89.8 points.
He said this figure was the highest
since July 2018 and pointed out that
there were increases in five sub-groups
that formed the
confidence index.
“The sharpest
rise among them
was seen in the
construction
confidence index
with 8.3%,” Turşucu
said. “In fact,
the construction
confidence index
has been on the
rise for the last
five months. The
decline in interest
rates seems to have accelerated the
construction group.”
He said the retail and service sectors
experienced continuous increases in
the last three months. Turşucu said it
was also possible to see the increase
in the retail group in the balance sheet
of the retail companies in the stock
exchange.
He added that the volatile trend in the
consumer confidence index is still
underway. “If the uptrend series starts
in the consumer group, we may see
strengthening in the automotive and
home appliance sectors,” he said. “On
the other hand, consumer confidence
will be the indicator of the increase
in expenditures, but I can say that the
general data on growth gives positive
signals.”
İsmet Demirkol from Bahçeşehir
University said the real sector
confidence index increased by 104.2,
the service sector confidence index by
90.7, the retail trade confidence index
by 102.3, and the construction sector
confidence index by 65.1.
“In particular, the fact that the process
that began with the central bank’s
interest rate cut of 425 basis points
in policy rate on July 25 continued
on Sept. 12 with an interest rate cut
of 325 basis points contributed to a
4.5% increase in consumer confidence
index, and this contribution reflected
positively to the manufacturing
industry, services, retail trade and the
construction sectors,” Demirkol said.
“It should be noted that the central
bank’s interest rate cut of 250 basis
points that continued on Oct. 24 and the
positive effect of the interest rate cut by
a total of 1,000 basis points since July
25 will also contribute to the November
economic confidence index,” he said.
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