Turkish Economy Flashes Warning Signs: Consumer Confidence Plummets, Industry Continues Contraction

 October Data Reveals Slowing Growth and Divergence, Placing Pressure on Households

ISTANBUL – October 2025 data for the Turkish economy points to a severe slowdown in domestic demand and sectoral divergence. An analysis of the released Consumer Confidence Index, SAMEKS, and Manufacturing PMI data suggests the economy is on a path of fragile expansion led by the Services sector, but the main pressure points are intensifying for consumers and manufacturers.

✍️ A Note on Method and Modern Journalism

I simply don’t have time to write long-form articles anymore. Like many of my colleagues, I’ve adopted platforms like YouTube as a much easier way to express myself to a broad audience. How quickly one forgets how to write an article! The brain now shapes every thought according to the 15-minute YouTube format.

Most of the time, I consider giving up writing entirely. But, since I can’t find satisfactory analysis on many economic topics that I believe readers should be aware of, I continue on this path. A few months ago, I started working with artificial intelligence. My productivity has increased by at least threefold. From now on, I’ll be writing many articles with the help of AI. “So what is your contribution?” you might ask? First, asking the right questions. Second, feeding the correct data to the AI. And the last and most important part is quality-controlling the final product. That is, reading the article line by line and questioning myself whether I can do better. Here is the final product:

Atilla Yesilada

📉 Consumer Confidence Tanks: Households Postpone Purchases

The Bloomberg HT Consumer Confidence Index fell sharply in October to 68.34. This decline signals a significant deterioration in households’ perception of the economy.

• Inflation Fear: A key takeaway is the rise in inflation expectations across sub-indices. Hot political domestic issues, a poor performance in the stock market for most of the month, and rising inflation expectations negatively affected consumer sentiment.
• Consumption Slump: The Consumption Tendency Index, which measures the suitability of the current period for purchasing durable goods, cars, and housing, also decreased. High prices and anticipation of discounts (Black Friday, year-end markdowns) are causing consumers to postpone major purchases, creating a brake on domestic demand.

🏭 Industry Contracts, Services Sector Offers Lifeline

PMI data, which tracks the pulse of economic activity, presents a mixed picture.

Manufacturing in its 19th Month of Contraction

The Istanbul Chamber of Industry (ISO) Manufacturing PMI Index slipped from 46.7 in September to 46.5, remaining below the 50.0 threshold for the nineteenth consecutive month.

• Demand Collapse: New Orders dropped further due to weakness in both domestic and external demand. Export markets continued to lose momentum.
• Production Loss: Output saw its sharpest decline in three months as demand stagnation accelerated the slowdown.
• Job Cuts: As new orders weakened, manufacturers reduced employment for the eleventh consecutive month.

However, the SAMEKS Manufacturing Sector Index, published by MÜSİAD, remained in the contraction zone at 49.6, but a significant increase in stocks (56.1) in sub-indices suggests that companies are in a state of cautious preparation for a potential future demand increase.

Services Sector: The Engine of Employment

The SAMEKS Composite Index stayed in the expansion zone at 51.3, despite a marginal 0.1-point decrease. The driving force behind this resilience is the Services Sector.

• The SAMEKS Services Sector Index rose by 2 points to 51.6.
• Employment Surge: The sector stood out with a strong 13.7-point increase in the employment index, rising to 51.4, indicating improved hiring conditions.
• Future Confidence: A sharp rise in input purchases (59.1) suggests improved demand expectations from services firms for the coming period.

🎯 Where is the Turkish Economy Heading?

The comprehensive analysis of the October data indicates that the Turkish economy’s expansion is primarily supported by the services sector, but the sustainability of this trend is at risk.

In Summary: While weakness deepens in the industry and consumer segments, the services sector shows some resilience. However, such a sharp fall in consumer confidence will further pressure domestic demand in the coming months, increasing the risk of a broader economic slowdown. The sustained rise in input and output prices, driven by Lira depreciation, also ensures that inflationary pressure remains active.