In October, the Consumer Confidence Index fell further to 57.3 points, its lowest level since December 2008 (after it had dropped to 59.3 in September from 68.3 in August). These values compare to a long-term average of 75.1 since 2004. The latest figure does not bode well for consumer spending and retail sales in Q4. As Turkey’s currency crisis became full-fledged in August, calendar-adjusted real retail sales growth already fell to just +1.3% y/y from an average +5.9% in Q2 and +8.9% in Q1. Similarly, calendar-adjusted industrial production growth declined to +1.7% y/y in August from an average +5.2% in Q2 and +10% in Q1. Looking at important industrial sub-sectors, output in August contracted in clothing (-3.4% y/y), pharmaceuticals (-11.1%), fabricated metal products (-5.6%), machinery & equipment (-5.4%) and automotive (-5.2%). It still increased in food (+13.4%), textiles (+1.4%), chemicals (+6.7%), electronics (+12.6%) and electricals (+1.7%). Euler Hermes expects two to three quarters of negative real GDP growth until mid-2019 and full-year growth of +3.3% in 2018 and +0.4% in 2019.
