Turkey’s consumer confidence index fell in December after a dramatic higher move in November, Turkish Statistical Institute (TurkStat) said in a report Monday.
The index fell to 73.58 in December from 77.15 in November, the report said.
The index had jumped to a high reading in November from 62.78 in October.
Worries about employment seemed to have been predominant. The number of people in the unemployed expectation index decreased by 7.4 percent compared with the previous month.
General economic confidence also dropped by 5.6 percent in December, the report said.
But confidence in savings improved; the probability of savings index was up 1.9 percent.
Better performance by the Turkish lira may help confidence improve in the near future. Since the U.S. Federal Reserve raised interest rates on Dec. 16, the Turkish lira has been higher against the dollar, rising from about 2.96 to the dollar before the rate hike to about 2.91 on Monday.
“We see durability in the Turkish economy still with good growth drivers, a pickup in exports to the EU, a cheap currency, sound public finances and banks, and favorable demographics, all helped by low oil and commodity prices,” commented Timothy Ash, a credit strategist at investment bank Nomura in London in a note published on Wednesday.
Turkey’s Gross Domestic Product is one of the strongest among emerging markets, at an annual rate of 4 percent, according to a report by TurkStat in December.
Inflation has stabilized, according to the Turkish central bank.
Inflation hit an annual rate of 8.1 percent in November from 7.58 percent in October, TurkStat reported on Thursday.
In its most recent inflation report, the Turkish central bank said that rising food prices were one of the most important inflationary pressures but they were beginning to fall back. The report noted that inflation has been stabilizing in Turkey for the past six months.
Annual inflation has ranged between about 7 to 8 percent during that period.
With inflation stabilizing, domestic demand continues to drive economic growth in Turkey.
Consumer spending in Turkey increased to 22.6 million Turkish liras ($7.8 million) in the third quarter of 2015 from 21 million Turkish liras ($7.3 million) in the second quarter of 2015, according to Trading Economics. Turkish consumers spent about $453.6 million in 2014, compared with $447.7 million the previous year.
“Moreover, the planned increase in the minimum wage to 1,300 Turkish liras per month will support further consumer spending, along with a substantial fiscal stimulus package that the new government has promised,” commented Bora Tamer Yilmaz, an economist with Ziraat Securities in Istanbul.
In the medium-to-long term, structural reforms planned by the government voted into office on Nov. 1 are expected to boost economic growth.
Labor market reforms and increased job flexibility could help increase Turkey’s output growth, credit agency Moody’s wrote as it affirmed Turkey’s credit rating at investment grade level on Dec. 4.