July 27, 2020, Monday
July manufacturing sector capacity utilization rate (CUR), real sector confidence index (RSCI) and sectoral confidence indices will be released. Following easing of COVID-19-led-closures in May, all these macro-economic indicators started to rise in May and got momentum further in June. A hint regarding July figures came with the IHS Markit PMI flash figures of Turkey’s main trade partner Eurozone. Flash Eurozone manufacturing PMI figures rose by 3,7 points to 51,1 in July compared to previous month. Figures above 50 indicate growth in the sector. From the perspective of the supply chain, this may be a sign for a possible improvement in Turkey industrial production in July. We will focus on relevant hints in CUR and RSCI figures to be released on Monday. Sectoral confidence indices, on the other hand, will help us understand the course of domestic demand.
July 29, 2020, Wednesday
Fed will release its policy rate decision. The target rate, which is the policy rate, is at the range of 0-0.25 percent since March 15, the date coronavirus declared pandemic. Fed is expected to hold the policy rate unchanged in July FMOC meeting. There are two developments supporting this expectation. Firstly, the Beige Book published on July 15, pointed to improvement in economic activity with a lower performance compared to the period before Covid-19, lower wages despite decrease in unemployment, and roughly flat input and selling prices. Secondly, the latest speech made by Fed governors in July belongs to Lael Brainard. Brainard stated that downside risks are maintained, the second wave of COVID-19 would further increase uncertainties, and financial and monetary support remain important. Lastly, Fed expanded loan facilities in July to revive economic activity and maintain financial support.
Central Bank of Turkey (CBT) will release second quarter Inflation Report. CBT decreased its inflation projection for the end of 2020 from 8.2% to 7.4% and kept its inflation projections for both 2021 and medium term at 5.4% and 5% respectively in its first quarter Inflation Report. Furthermore, CBT hold its policy rate at 8.25% at monetary policy committee meeting on July 23, stressing on upward risks regarding its year end inflation projections (pandemic-related rise in unit costs leading to an increase in the trends of core inflation indicators, and food inflation). We will focus on inflation and economic projections of CBT in 2Q20 Inflation Report.
SAMEKS (purchasing managers indices) figures for July will be released. SAMEKS is one of the main indicators showing the tendency in both industrial and services sectors. SAMEKS Composite Index rose by 3.5 points m/m to 49.3, SAMEKS Services Sector Index rose by 2.1 points m/m to 46.3, and SAMEKS Industrial Sector Index rose by 7.0 points m/m to 56.7 in June. Levels above 50 points to growth in the sector compared to the previous month.
Tourism figures for June will be released. The sector has been contracting since March 2020 when Covid-19 burst.
Foreign trade figures of June will be released. Both exports and imports increased by 12% and 13% m/m respectively in May. According to Turkish Exporters Assembly (TİM) exports rose by 35% m/m to 13,5 billion dollars in June. Furthermore, according to central government budget figures of June pointed out a robust growth in gold excluded import figures.
July 30, 2020, Thursday
Economic Confidence Index for July to be released. The index rose by 11.8 points m/m to 73.5 in June. Being one of the parameters of Economic Confidence Index, TUİK Consumer Confidence Index fell by 1.8 points to 61.0 in July. In calculation of the Economic Confidence Index, the following parameters are considered: Consumer Confidence Index, Real Sector Confidence Index, and Sectoral (Services Sector, Retail Trade Sector, and Construction Sector) Confidence Indices. Historically, the Economic Confidence Index has a high correlation with the Services Sector Confidence Index and moves in parallel with both the Real Sector Confidence Index and the Retail Trade Sector Confidence Index. Therefore, the confidence indices to be released on Monday will help us to understand the course of the Economic Confidence Index in July.
Fulya Gürbüz, Ph.D.