Turkey: Economic confidence surges in July amid coup bid

By Bahattin Gonultas and Fatih Erkan Dogan

ANKARA (AA) – Turkey’s economic confidence index in July rose by 14.9 percent compared to the previous month, signaling no damage to trust in the country’s economy after the July 15 coup attempt.

According official data released by the Turkish Statistical Institute on Thursday, Turkey’s economic confidence index increased from 83.33 in June to 95.73 in July.

The upward trend reflects Turkish people’s trust in the economy was undamaged after the July 15 coup attempt, according to analysts.

Reports show improvement in the confidence index was driven by increases in all sub indices except consumer confidence, including services, retail trade, construction and real sector confidence.

Services confidence index increased to 100.86, retail trade confidence index increased to 103.56, construction confidence index increased to 82.95 and real sector confidence index increased to 106.3 in July.

The construction confidence index also saw a 2.5 percent rise to 82.95 with 1.9 percent improvement seen in the real sector confidence to 106.3 in July.

Among sub indices, consumer confidence index saw a deterioration of 3.5 percent, slipping from 69.43 to 67.03.

Economic confidence index is seen as significant reading for the course of economy as it is a composite index that aggregates sub-indices of consumer confidence, real sector services, retail trade and construction confidence indices, reflecting overall sentiment towards the health of the economy.

"The confidence is probably a solidarity response of the people," economist Bora Tamer Yilmaz at Ziraat Securities told Anadolu Agency.

"The citizens have full faith in the government and other institutional economic policy agents such as the bank’s association or the central bank," Yilmaz said.

"Evaluating recent developments as an attack on their own soil, people prefer uniting around a common cause instead of shying away and expressing pessimism," he added.

On Wednesday, Deputy Prime Minister Mehmet Simsek said that more than $9 billion worth of foreign currency in Turkey has been changed to Turkish lira since the July 15 coup attempt.

Simsek credited the switch to lira by Turks as protecting the economy following the attempt to overthrow the government.

“Turkish people who stopped the July 15 coup attempt [also] defeated the coup in the Turkish market by exchanging their foreign currency to the value of $9 billion,” Simsek said.

Yilmaz said the resilience of Turkish Lira, which could not sharply pass its historic high, reflects the level of confidence people have in Turkey’s economy.

"After approaching a 3,10 level, [the] lira has recovered some of its losses and pulled back towards 3,01 level," Yilmaz said. "We have observed that households have switched to local currency, selling their foreign denominated savings."

"The quick response of the authorities, ensuring healthy functioning of markets also calmed down concerns, boosting confidence in the economy." Yilmaz added.

KapitalFx Analyst Enver Erkan said that in the July's economic confidence index, it is seen that sub-indices, such as services, retail trade, construction and real sector, were the main reason to the huge surge.

Erkan said the data belongs to first two weeks of the month.

"We would see the main effect of July 15 coup attempt in next month's data; maybe one time fluctuation could be seen, but we do not expect a long term," Erkan said.

"Confidence indices will maintain the current trend throughout the year. As a result of that, we did not revise any of our economic forecasts."