Macro and Politics

*TURKSTAT will release March foreign trade figures 10:00 local time. Preliminary data released by the Ministry of Trade indicates a modest reduction in the trade deficit for March. According to the preliminary figures, exports rose by 3.2% y/y to USD23.4bn, while imports increased by 2.3%, amounting to USD30.7bn. Consequently, the trade deficit narrowed from USD7.8bn in February to USD7.3bn in March, with the annual deficit standing at USD84.6bn.

* The adjusted unemployment rate dropped from 8.2% to 7.9% in March. As per the broad-based unemployment calculations: The rate of composite measure of labor underutilization – including time related underemployment, potential labor force and unemployment – climbed from 28.5% to 28.8%, which stands for the highest level since June 2024. Moreover, the combined rate of time-related underemployment and unemployment decreased from 18.4% to 17.9%, while the combined rate of unemployment and potential labor force increased from 19.6% to 20.1%.  We assess that the rising idiosyncratic issues as of March 19, along with the subsequent tightening measures undertaken by the CBT, may begin to weigh negatively on economic activity starting from the second quarter. Accordingly, we expect upward pressure to persist particularly in the rate of composite measure of labor underutilization, which we monitor more closely.

* The Economic Confidence Index declined by 4.2% on a monthly basis in April, falling to 96.6. It’s worth noting that the index had risen to 100.8 in March, its highest level since June 2023, and marking its first return above the 100 threshold since March 2024. As anticipated, the adverse impacts of rising domestic angst and increased market volatility as of March 19 have begun to surface in the April leading indicators. The deterioration across sub-indices has once again pushed the Economic Confidence Index below the 100 threshold, signaling a renewed shift toward pessimism in overall economic sentiment. As per the sub-indices of April data: The consumer confidence index declined by 2.3% to 83.9, the real sector confidence index fell by 2.3%, reaching 100.8, te services confidence index dropped by 4.3% to 109.5, the retail trade confidence index decreased by 2.5% to 110.6 and lastly, the construction confidence index declined by 4.2%, standing at 85.1 in April compared to the previous month.