Confidence builds in Turkish real economy

• Optimism for next quarter
• Order levels still low
• Syria boost to exports

Turkish businesses are looking forward to better times but are still struggling with present day issues such as low levels of orders and a sluggish general economic environment.

The Turkish Central Bank’s latest business tendency statistics and real sector confidence index, issued on February 24, recorded a steady increase in positive sentiment among the country’s business community. Gains were uneven between the current situation and future expectations.

The bank’s broader confidence index climbed to 102.4 points, up from January’s 100.9, the highest level since mid-2024, with any score above 100 indicating a positive outlook. 

This improvement was underpinned by expectations of strong output over the coming three months, though at 115 points this was somewhat down on January’s 118. 

There were however rising hopes for export orders, up from 117 the previous month to 122 points, in part spurred by the likelihood of increased trade with Syria. 

Some improvement in business sentiment may have come from higher stock demand at the end of last year, said Istanbul Technical University economist Professor Öner Günçavdı, with orders coming in ahead of expected price rises. 

“We saw optimism due to year-end stock demand aimed at avoiding prices increases in the new year and that might have been reflected to some degree in the survey,” Günçavdı said.

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On the downside, the survey found businesses were still pessimistic about the levels of orders on their books and the general economic climate. However, even this indicator improved to its best showing since May last year, rising to 93 points. 

The results of this survey are at odds with the findings of another central bank study, also released on February 24, which showed the utilisation of industrial capacity continuing to fall. Plant activity has reached its lowest level in two years. 

It also runs counter to a report from state statistics agency Turkstat issued the same day, which flagged a fall in confidence rates in both the construction and services sectors – although sentiment in the latter, along with the retail sector, remained strongly positive.