Turkey's economic confidence climbs as inflation and trade deficit widen

Turkey’s economic confidence index rose to 98.9 in June, a 1.8 % monthly gain and the highest since February 2026. Consumer confidence also improved, reaching 87.9, while sectoral confidence indices for manufacturing, services and retail edged higher.

Despite the optimism in confidence measures, inflation remains elevated. The annual consumer price index hit 32.4 % in April, with a monthly rise of 4.2 %. Producer prices increased 28.6 % year‑on‑year. The central bank responded by raising its intermediate inflation target to 24 % for 2026 and lifting year‑end inflation forecasts.

Industrial production contracted 1.1 % in March, indicating a fragile manufacturing sector. Meanwhile, the trade deficit expanded to $11.2 billion, even as retail sales stayed robust, posting a 21.1 % year‑on‑year increase in March. Credit growth slowed sharply, with consumer loan expansion falling from over 60 % to 36 % month‑on‑month.

Export outlook indicators also weakened; the Export Demand Index slipped to 99.5 in May, below its long‑term average, although the Market Resilience Index stayed near 98.8. These mixed signals highlight a Turkish economy balancing high inflation and external imbalances with persistent domestic demand.