Turkey’s economic prospects showed signs of improvement in December, with a notable uptick in the country’s economic confidence, primarily driven by growing optimism among retailers and service providers.
The Turkish economic confidence index for December 2024, released by the Turkish Statistical Institute on Monday, rose to 98.8, up from 97.1 in November. This increase was largely attributed to a boost in service providers’ confidence, which climbed to 113.6, from 111 in the previous month. Retailer confidence also saw a modest rise, reaching 113 from 111.7. Confidence in the construction sector surged to 89.4, up from 87.8 in November.
Consumer confidence also saw improvement, edging up from 79.8 in November to 81.3 in December. However, confidence among manufacturers declined slightly, falling to 102.7 from 103.4 the previous month.
Turkey’s economy has endured a tough few years, with the COVID-19 pandemic, high inflation, a cost-of-living crisis, and slowing industrial growth all weighing heavily on the country. In October 2022, inflation soared to a 24-year high of 85.5%, and while it has since eased, it remained elevated at 47.1% in November 2024. This persistent inflation was largely fueled by the Central Bank of the Republic of Türkiye’s interest rate cuts under the guidance of President Recep Tayyip Erdoğan.
Erdoğan’s unorthodox economic belief that looser monetary policy would help reduce inflation clashed with the strategies of other major central banks. This approach, however, severely impacted the Turkish lira and led to surging costs for rentals and food. Although the central bank has since reversed its course, the damage to the economy is considered significant, and recovery may be gradual.
Despite these challenges, the latest economic confidence figures suggest that Turkey could be slowly recovering from its recent economic setbacks.
