Macro and Politics

* TURKSTAT will release August Economic Confidence Index @ 10:00 local time. The economic confidence index increased to 99.8 in July from 98.9, reaching its highest level since February, while its three-month average rose to 98.6 from 97.5. While readings above 100 indicate optimism regarding the overall economic outlook, the index remaining below this threshold suggests that a cautious assessment of economic activity persists. Among the sub-indices, consumer confidence rose by 2.2% to 89.8, services confidence by 1.4% to 112.0 and construction confidence by 0.6% to 83.5, while real sector confidence declined by 0.8% to 101.2 and retail trade confidence fell by 1.6% to 111.0. The divergence across sub-indices suggests that the recovery has yet to become broad-based across sectors. While high-frequency indicators point to somewhat more resilient growth in the second half, we do not expect a strong and broad-based acceleration in the near term given the continued drag from tight financial conditions. We expect economic activity to become more balanced in 2H26 as financial conditions gradually ease and maintain our 2026 growth forecast at 3.2%.

* TURKSTAT will release July foreign trade figures @ 10:00 local time. The preliminary July trade figures released by the Ministry of Trade point to a modest narrowing in the trade deficit. According to the preliminary figures, exports rose by 2.9% y/y to USD25.6bn, while imports increased by 5.2% y/y to USD33.0bn. The monthly trade deficit narrowed to USD7.4bn in July from USD10.4bn in June, while the 12-month cumulative deficit widened to USD96.6bn from USD95.7bn.