Consumer Confidence Slumps in March, Confidence in Economy Team Hits Rock Bottom

Consumer sentiment in Türkiye deteriorated sharply in March, with the Bloomberg HT Consumer Confidence Index posting a double-digit monthly decline. Rising geopolitical tensions, higher inflation expectations, and weakening purchasing power are weighing on households, increasing the risk of a slowdown in domestic demand.

Sharp Decline in Consumer Confidence

The Bloomberg HT Consumer Confidence Index fell by 10.33% month-on-month in March, dropping to 68.12. The reading confirms earlier preliminary data, which had already signaled a steep deterioration in sentiment.

• Preliminary index: down 10.46% to 68.03

The magnitude of the decline points to a broad-based weakening in consumer confidence.

Deterioration Across All Components

A breakdown of the index shows a decline across all major subcomponents:

• Perceptions of current economic conditions weakened
• Expectations for the future deteriorated
• Consumption tendencies fell sharply

This suggests that not only sentiment but also actual spending behavior is beginning to soften.

Inflation Rate in Turkey Forecaster: Istanbul Prices Surge 2.97pct

Geopolitical Risks and Inflation Expectations Weigh

The primary driver behind the decline appears to be rising geopolitical tensions, particularly the conflict in the Middle East.

At the same time:

• Inflation expectations increased significantly
• Unemployment expectations edged higher

These factors combined to undermine household confidence and financial outlook.

Consumption Trends Signal Slowdown

One of the most notable developments was the sharp drop in consumption willingness.

• Consumption Tendency Index fell 16.09% to 70.29
• Preliminary reading showed an even steeper 17.24% decline

The index measures the suitability of current conditions for purchasing durable goods, cars, and housing—indicating that households are becoming increasingly cautious about major spending decisions.

If this trend persists, it could translate into a meaningful slowdown in domestic demand in the coming months.

Manufacturing Sector in Turkey Face Sharpest Downturn in Months

Expectations Index Also Weakens

Forward-looking sentiment also deteriorated significantly:

• Expectations Index declined 10.57% to 67.67
• Preliminary expectations index dropped 11.32% to 67.11

This indicates that consumers are becoming more pessimistic not only about current conditions but also about the near-term outlook.

Surveys Confirm Weak Confidence

Public opinion surveys reinforce the negative sentiment captured by confidence indicators.

According to a March survey by Metropoll Research:

• 69% of respondents believe the economy is poorly managed
• Only 27.3% consider it well managed

Notably:

• 39% of ruling AK Party voters also expressed dissatisfaction with economic management

This suggests that concerns about the economy extend beyond opposition voters.

Perception of Economic Decline Remains Strong

The same survey found that:

• 60% of respondents believe the country is heading in the wrong direction
• 29% see a positive trajectory

While optimism is relatively higher among government supporters, pessimism remains widespread across the broader population.

Economy Still the Top Concern

Economic issues continue to dominate the public agenda.

Key concerns include:

• Cost of living pressures
• High inflation
• Loss of purchasing power

However, there is an emerging shift:

• The share of respondents identifying the economy as the top issue has declined by more than 20 percentage points over the past two years

This suggests a degree of normalization or “adaptation” to prolonged economic hardship.

Rising Focus on Inequality and Fairness

Another notable trend is the increasing importance of perceived inequality.

• “Lack of fairness” rose to 12%, becoming the second most cited issue

This indicates that economic dissatisfaction is increasingly being interpreted not just in terms of income loss, but also in relation to governance, legal fairness, and income distribution.

Outlook: Growing Risks to Domestic Demand

The sharp decline in consumer confidence in March highlights growing fragility in household sentiment.

Key risks include:

• Elevated inflation expectations
• Ongoing geopolitical uncertainty
• Weakening consumption trends

Taken together, these factors point to rising downside risks for domestic demand and economic growth in the near term.