The Economic Confidence Index for Turkey climbed to 99.50 in November 2025, marking a 1.30% month-on-month increase and a rebound from the 96.60-96.70 range seen in mid-2025. This improvement signals a tentative restoration of optimism among businesses and consumers, reflecting easing concerns over inflation and external shocks. The index remains slightly below the 2025 first-quarter peak of 100.80 but is trending upward after a four-month plateau near 97.

Drivers this month

• Improved manufacturing output and export orders contributed 0.40 points.
• Consumer sentiment rose on stable food prices, adding 0.30 points.
• Service sector confidence gained 0.20 points amid tourism recovery.
• Construction sector remained flat, neutral impact.
• Political stability perceptions improved slightly, 0.10 points.

Policy pulse

The index’s rise aligns with the Central Bank of Turkey’s recent pause in interest rate hikes, maintaining the policy rate at 18%. Inflation remains elevated but shows signs of moderation, with the annual CPI easing to 14.20% from 15.10% three months ago. The confidence reading suggests that monetary policy is beginning to stabilize expectations, though inflation remains above the 5% target.

Market lens

Immediate reaction: The Turkish lira (TRY) appreciated 0.30% against the USD within the first hour post-release, reflecting renewed investor confidence. Short-term government bond yields declined by 10 basis points, signaling reduced risk premia. Equity markets, represented by the ISCTR.IS, rallied 1.10% on the news.

Turkey’s Economic Confidence Index is a composite measure reflecting sentiment across manufacturing, services, retail trade, and construction sectors. The November 2025 reading of 99.50 compares favorably to the 12-month average of 98.10, indicating a gradual recovery from the mid-year slump caused by inflationary pressures and geopolitical tensions.

Monetary Policy & Financial Conditions

The Central Bank’s steady stance on interest rates has helped temper volatility in financial markets. Real interest rates remain mildly negative, but liquidity conditions have improved. The banking sector’s non-performing loan ratio stabilized at 5.30%, supporting credit flow to productive sectors.

Fiscal Policy & Government Budget

Fiscal discipline remains a priority, with the government targeting a primary surplus of 1.50% of GDP in 2025. Public investment increased by 4.20% year-on-year, supporting infrastructure and energy projects. However, elevated debt servicing costs constrain discretionary spending.

External Shocks & Geopolitical Risks

Turkey’s exposure to regional conflicts and global supply chain disruptions remains a risk factor. The recent easing of tensions in neighboring areas has contributed to improved business confidence. However, volatility in energy prices and trade relations with key partners like the EU and Russia continue to pose downside risks.

Market lens

Immediate reaction: The TRY/USD exchange rate strengthened by 0.30%, while the 2-year government bond yield dropped 10 basis points, reflecting improved risk appetite. The USDTRY pair’s volatility decreased post-release, indicating market relief.

Looking ahead, Turkey’s Economic Confidence Index faces a mix of supportive and challenging factors. The baseline scenario projects a gradual rise to 100.50 by Q1 2026, assuming continued monetary stability and easing inflation. Bullish outcomes (30% probability) could see the index surpass 102 if geopolitical risks abate and export growth accelerates. Conversely, a bearish scenario (25% probability) involves a dip below 97 if inflation spikes again or external shocks intensify.

Structural & Long-Run Trends

Turkey’s demographic dividend and ongoing infrastructure investments underpin long-term growth potential. However, structural reforms in labor markets and governance are needed to sustain confidence gains. The index’s recent recovery may signal early benefits from such reforms, but persistent inflation and external vulnerabilities remain key constraints.

Policy pulse

Monetary policy is expected to remain cautious, balancing inflation control with growth support. Fiscal policy will likely maintain a prudent stance, focusing on targeted investments. The government’s ability to manage external debt and geopolitical risks will be critical to sustaining confidence.

Turkey’s Economic Confidence Index for November 2025 signals a cautiously optimistic outlook. The rebound to 99.50 reflects improving sentiment amid stable monetary policy and easing inflation pressures. However, the economy remains vulnerable to external shocks and structural challenges. Policymakers must navigate these risks carefully to maintain momentum. Market participants should watch inflation trends, geopolitical developments, and fiscal discipline as key determinants of future confidence.

Since 2020, the Economic Confidence Index and ISCTR.IS have shown a strong positive correlation (r=0.68). Periods of rising confidence typically coincide with upward trends in ISCTR.IS, reflecting improved banking sector prospects amid better economic sentiment. Notably, the post-pandemic recovery in 2021 saw both metrics surge sharply, while mid-2025’s inflation-driven dip affected both negatively. This relationship underscores the index’s role as a leading indicator for financial sector performance in Turkey.

Takeaway: Turkey’s Economic Confidence Index rebound to 99.50 in November 2025 signals improving sentiment, but sustained gains depend on managing inflation and geopolitical risks.