Macro and Politics

*Istanbul Chamber of Industry (ICI) Turkey October Manufacturing PMI will be announced @ 10:00 local time. ICI Turkey Manufacturing PMI edged down to 47.9 in September from 48.1 in August, remaining below the 50 threshold for the 30th consecutive month, while the quarterly average rose to 47.9 in 3Q26 from 47.5 in 2Q26. Weak demand conditions remained the main drag on the manufacturing sector, with output falling for a fourth straight month and both new orders and new export orders remaining under pressure. Meanwhile, input cost and output price inflation accelerated to four-month highs amid higher fuel, transportation and raw material costs. The sectoral PMI survey also pointed to broad-based weakness, as output contracted in nine of the ten sectors monitored. On the consumption side, the Bloomberg HT Consumer Confidence Index fell 8.2% m/m to a six-month low in September, while the Consumption Tendency Index declined 12%, adding to signs of softer domestic demand. Nevertheless, other high-frequency indicators, particularly strong annual growth in retail sales and resilient services activity, continue to point to GDP growth above 3% y/y in 3Q26, versus 2.3% in 2Q26. We maintain our 2026 GDP growth forecast at 3.2%, with risks skewed to the downside.

* The CBT will release weekly foreign portfolio flows and money & banking statistics for the October 16 – 23 period today at 14:30 local time. Due to the October 29 Republic Day holiday, weekly foreign portfolio flows and money & banking statistics for the October 16–23 period will be released today. To recall the previous week’s data: Foreign investors were net sellers of USD88.8mn in equities and USD44.4mn in bonds, excluding repo transactions, during the October 9–16 week. Equity outflows continued for a third successive week, bringing cumulative net foreign sales over the period to USD527mn. In the bond market, foreign investors shifted back to net selling following purchases of USD451.1mn in the preceding week, while foreigners’ share in the total bond stock declined to 6.5% from 6.6%. Moreoever, residents’ FX deposits (excluding gold and adjusted for the EUR/USD parity effect) registered a slight increase of USD89mn during the October 9–16 week, while their total FX deposits (including gold, adjusted for the price effect) fell by USD848mn.

* The Economic Confidence Index declined from 101.3 to 97.3 in October, reaching its lowest level since May and falling below the 100 threshold for the first time in three months. Among the subindices, consumer confidence recorded the sharpest deterioration, falling by 7.7% to 84.8, while the Real Sector Confidence Index declined by 1.4% to 101.1 and the services sector confidence index fell by 2.4% to 109.2. In contrast, confidence in retail trade increased by 1.1% to 112.5, while construction sector confidence edged up by 0.4% to 83.3. October's figures mark a pronounced reversal in economic sentiment following September's reading, which was the highest since 2023. The sharp decline in consumer confidence points to a deterioration in households' assessment of economic conditions, while simultaneous losses in real sector and services confidence underscore the fragility of the recovery in economic activity. The improvement in retail trade confidence, despite the marked deterioration in consumer sentiment, presents a mixed picture of domestic demand conditions. With the headline index slipping back into pessimistic territory, the latest readings suggest growing downside risks to growth momentum in 4Q26. We maintain our 2026 GDP growth forecast at 3.2%, although the cooling in domestic demand and broadening weakness in confidence indicators leave risks to our growth outlook increasingly skewed to the downside.