A currency exchange in Istanbul, Turkey. Consumer and construction sector sentiment is in the doldrums in the country. Image Credit: Reuters

Istanbul: Turkey’s economic confidence index tumbled 8.5 per cent in May to 77.5 points, hitting its lowest level since October, official data showed on Tuesday, with consumer and construction sector sentiment in the doldrums.

The index points to an optimistic economic outlook when above 100 and a pessimistic one when below 100. In April the index rose 3.4 per cent to 84.7 points, marking its third consecutive month of gains.

Consumer confidence dived 13 per cent in May to 55.3 points, while construction sector confidence dropped 7.7 per cent to 49.8 points.

The Turkish economy has slid into recession, contracting 3 per cent in the final quarter of last year, with economists in a Reuters poll forecasting a contraction of 2.5 per cent in the first quarter of 2019.

A tumbling lira, domestic demand slowdown and tightening financing conditions have driven the downturn in the economy.

The lira has lost 37 per cent of its value against the dollar since the end of 2017.

At 0755 GMT, the lira stood at 6.065 against the US currency, barely changed from Monday’s close. Ankara has taken steps through the central bank and state lenders to support the lira in the face of a continued sell-off this year.

A decision to annul the Istanbul mayoral election and re-run it on June 23 has added a source of political uncertainty which has further unsettled market sentiment. The main opposition candidate narrowly defeated President Tayyip Erdogan’s AK Party (AKP) in the March vote.