Turkish economy continues to slow down

As the new statics arrive, it can be seen that the deterioration of the Turkish economy is continuing in the the third quarter of 2014. While leading indicators continue to weaken, according to the statistics based on recent numbers, the real sector confidence index has been stagnating for three consecutive months, while the capacity usage rate has been shrinking for two consecutive months.

The feeble run of expectations, observed in production volume, capital expenditures and the labor market, effects the stagnation of the capital index. Because of this effect, the strong growth of 5.1 percent seen in the first four months of the year, is not continuing. The numbers, which were 3.5 percent in May and 1.4 percent in June, indicate that this stagnation will also be reflected in the months of July and August. While the seasonally adjusted capacity usage rate was 74.3 percent in July, this rate decreased to 74.1 percent in August, while the net capacity usage rate was 74.7 percent.

Production volume expectancy for the three upcoming months fell 3.6 points, while the capital expenditure index for the 12 upcoming months was the index with the sharpest decrease with 3.9 points. The employment index also shows stagnation over the past two months. This data all indicates that the regression seen in the labor market over recent months might continue. The unemployment rate, which was 9.1 percent in March, rose to 9.5 percent in May, and the leading indicators show the rate is going to increase further.

Export orders recorded only limited growth in August, and it is clear that the stagnation of economic growth in Europe, in addition to the problems in Middle East, are negatively effecting Turkey's export orders.

Growth can become a...