Turkish consumer confidence resumes slide

Turkish consumer confidence resumed its decline in December as the aftershocks of a currency crisis cut into earnings, the Turkish Statistical Institute said.

Confidence among consumers dropped to 58.2 this month from 59.6 in November, the Turkish Statistical Institute said on Friday. Any reading below 100 indicates pessimism about the future.

The gauge had risen from 57.3 in August, the lowest level since December 2008, raising hopes that the worst of the economic turmoil was over.

Consumer Confidence Index, December 2018
Consumer Confidence Index, December 2018 (TUIK)

Friday’s announcement follows a raft of data that shows how a slump in the lira this year is pushing Turkey towards a painful recession. The currency hit a record low against the dollar in August and is still down by almost a third against the dollar this year despite a recent rally.

Government figures released this week showed retail sales dropping the most since records began in 2006. They dived 7.5 percent in October from the same month a year earlier.

The lira’s decline has helped push annual inflation to more than 20 percent, the highest levels since President Recep Tayyip Erdoğan came to power in 2003.

Turkey’s economy contracted 1.1 percent quarter-on-quarter in the three months to September, official data showed last week. Most economists are forecasting a slump in activity in the fourth quarter as well, meaning the country would be in a technical recession, defined as two straight quarters of negative economic growth.

The government has introduced tax cuts and a number of measures to support key industries such as construction and banking to help curb the slump in economic activity.

Turkey’s economic downturn comes ahead of local elections in March, the first major test of Erdoğan’s popularity since the introduction of an executive presidential system after a general election in June.

The unemployment rate rose to 11.4 percent in September, the highest level in 18 months, from 11.1 percent in August, according to government figures published on Monday.

The proportion of working age people under 24 who are not employed or in education climbed to 27.4 percent