WOOD Flash – Turkey macro: monthly data signal some brightening spots

The October survey results from the European Commission sentiment releases paint a picture of improvement across the board, which stands out relative to the rest of Europe and also given the backdrop of exceptionally high inflation. Consumer confidence appears to have hit a low point in June, and has been recovering since; the construction sector is exhibiting rising confidence and the industrial sector is signalling a downturn, a fairly volatile and gradual one. Overall, we see it as not appropriate to discount these signals as pure noise. The economy is adapting to the persistent high inflation and is also probably benefiting, to some extent, from the fallout of Russia. A bias for Lira depreciation as a trend remains the cost of the chosen policy path.