Akbank Economic Research team examined the series of macro-economic indicators published last week. According to the Research Team, “Signals of a slowdown in the economy are becoming evident.” The prominent paragraph from the report is as follows:
The capacity utilization rate (CUR) fell to its lowest level since August 2023 with 75.9% in July, seasonally adjusted, which is 0.4 points below its historical average.
The Real Sector Confidence Index (m.a.) was below the 100 threshold level for the first time since the epidemic days. Sectoral confidence indices also pointed to a general slowdown, which was more pronounced in retail trade. The downward trend in manufacturing industry’ orders continues, too.
While domestic demand was the driver of the slow-down in the last three months, in business survey details, orders, employment and sales price expectations for the next three months are weakening accordingly.
The growth forecasts we created with high-frequency indicators point to a below-potential weak quarterly momentum in Q3, following Q2. Although its depth is not yet clear, there is a cooling-off of activity consistent with the CBRT’s output gap forecasts. When evaluated together with declining credit momentum, demand-side inflation pressures are easing.
In summary, the effects of the tight monetary and macroprudential stance are becoming evident. Following the expected increase in the July-August period, depending on new tax adjustments (which are unlikely), or new hikes in state-controlled prices, it seems that an economic adjustment is in progress that will nudge the inflation trend down to the path described by CBRT.
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