Turkey’s Economy Hits the Brakes in July: Consumer Confidence Falls, Manufacturing Contracts

While BETAM’s second-quarter GDP estimate remains upbeat, July’s leading indicators point to a sharp slowdown in economic activity. Consumer sentiment dropped, manufacturing PMI stayed in contraction, and the SAMEKS composite index remained below the 50-point threshold. Polling data shows that the public’s biggest concern is still the economy.

BETAM Sees Strong Second-Quarter Growth

Researchers Ozan Bakış and Oğuz Yurtoğlu of BETAM used the nowcasting method to forecast Turkey’s second-quarter GDP performance. Based on finalized April and May data and partial June indicators, they expect the economy to grow 5.2% year-on-year in Q2 2025.

Seasonally and calendar-adjusted figures suggest a 1.1% expansion compared to the first quarter of the year.

July Data Signals Sharp Slowdown

However, July’s leading indicators reveal that the slowdown previously concentrated in production has now spread to consumers.

The Bloomberg HT Consumer Confidence Index fell 9.01% month-on-month to 70.06, reversing the upward trend of the past six weeks. The breakdown shows deterioration in consumers’ perception of current conditions, future expectations, and willingness to spend.

• Consumer Expectations Index: down 12.91% to 69.73.

• Consumer Tendency Index: down 9.74% to 71.41.

Economists point to uncertainty over interest rate cuts, political risk perceptions, and unmet wage expectations as the main drivers behind the decline. Persistent pressure on real wages has further dampened spending intentions.

Manufacturing PMI Records Steeper Contraction

The Istanbul Chamber of Industry (ISO) Manufacturing PMI dropped from 46.7 in June to 45.9 in July — its third consecutive monthly decline and the sharpest slowdown since October 2024.

• New orders fell for the 25th straight month, with the July drop marking the steepest since March.

• Weak external demand continued to depress new export orders.

• Manufacturers reduced employment, purchasing activity, and inventories in response to slower demand.

The lira’s depreciation pushed up input costs and output prices, adding to inflationary pressures on the sector.

SAMEKS Index Stays in Contraction Territory

The seasonally and calendar-adjusted SAMEKS Composite Index slipped 0.3 points from June to 45.9 in July, signaling continued stagnation in economic activity.

• Services sector index: up 0.2 points to 47.8.

• Industry sector index: down 0.4 points to 46.1.

Both sectors remain below the 50-point threshold that separates expansion from contraction.

Poll: Economy Still the Public’s Biggest Concern

GENAR’s latest survey asked respondents about the most important issue facing Turkey. Inflation and the cost of living topped the list at 35% overall, with 40.5% of men and 29.5% of women citing it as their primary concern.

Six months ago, this figure was around 60%, reflecting the gradual decline in inflation. However, respondents noted that the improvement is not yet visible in daily life.

Looking ahead to 2026:

• Only 5.1% believe the economy will be “much better”.

• 21.7% expect it to be “better”.

• 21.6% foresee no change.

• 51.4% combined expect the economy to be “worse” or “much worse”.

Source: BETAM, Bloomberg HT, ISO, SAMEKS, GENAR