Turkish Business Confidence, June 2022

Business confidence was 106.4 in June compared to 109.4 in May. June’s result was the worst since December 2021. However, the index remained above the 100th threshold, indicating sustained optimism among businesses.

The fall came on the back of deteriorating company valuations of current order books, while company sentiment on the overall business environment has now weakened. In addition, business views on expected production and export orders in the next three months, as well as total orders over the past three months, are less favorable.

Regarding the overall investment-related environment, EIU analysts added:

Turkey’s ability to attract and retain foreign investment will largely depend on how it manages the acute political and economic challenges inside and outside its borders. […] The widespread perception that the government is mismanaging the economy and politics has led to increased volatility in capital flows, a sharp depreciation of the lira and rising inflation. Other longstanding factors holding back foreign investment include regulatory uncertainty, a slow and unpredictable judiciary, weak (but improving) intellectual property protection, and unfair competition from smuggling and the informal sector.”

FocusEconomics Consensus Forecast experts expect fixed investment to increase by 0.9% in 2022, unchanged from last month’s forecast, and increase by 3.8% in 2023.