Macro and Politics

* TURKSTAT will release June Economic Confidence Index @ 10:00 local time. The economic confidence index increased from 96.4 to 97.2 in May. However, on a three-month moving average basis, the index declined from 98.4 to 97.2 over the same period. While readings above the 100 threshold indicate an optimistic perception regarding the overall economic outlook, current levels continue to point to a weak underlying sentiment as the index remains below this critical benchmark. Looking at the underlying components for May, the consumer confidence index rose by 0.3% to 85.8, while the real sector confidence index recorded a stronger 2.4% increase, reaching 101.0. On the services side, the services confidence index declined by 0.6% to 109.0, whereas the retail trade confidence index increased by 0.8% and climbed to 112.5. Meanwhile, the construction confidence index fell by 1.7%, easing to 82.1 during the month. The divergence observed across sub-components suggests a more balanced but uneven sectoral outlook rather than a broad-based and synchronized recovery in economic activity. Despite the recent improvement in confidence indicators related to the manufacturing sector, we do not expect a strong and widespread acceleration in economic activity in the near term, particularly as tight financial conditions continue to weigh on domestic demand dynamics.