Istanbul: The Turkish economy's confidence index recently hit a 10-month high, while annual inflation expectations have decreased, painting a positive outlook for the country. Trkiye's economic confidence index reached 100.3 in March 2024, although it experienced declines in the ensuing months, dropping to as low as 93.1 in August before starting to recover towards the end of the year. By January, the index had risen to 99.7 from 98.9 in December, as reported by the country's statistical office, Turkstat. According to Anadolu Agency, the consumer confidence index increased to 81, having previously hit a low of 75.9 in July of the previous year and concluding the year at 81.3. The real sector confidence index ended last year at 102.7 and reached 102.6 in January 2025. The services confidence index, which fluctuated throughout last year, hit a peak of 120.4 in February and finished the year at 113.6, starting the new year with a rise to an eight-month high of 116.5. The Central Bank of Trkiye (TCMB) released its Survey of Market Participants, revealing a decline in the 12-month ahead inflation expectation by 1.7 percentage points (pp) to 25.4% for market participants, by 3.8 pp to 43.8% for the real sector, and by 4.3 pp to 58.8% for households. Finance Minister Mehmet Simsek emphasized the importance of these inflation estimates in determining the pace of disinflation and committed to working towards permanently reducing inflation. Erhan Aslanoglu, an economist at Istanbul Bilgi University, explained to Anadolu that the confidence indices indicate a sectoral differentiation within the economy. Specifically, the services sector is showing gradual improvement, while the competitiveness of the Turkish industry has weakened, despite recent movements seen in the construction sector due to a rate cut. Aslanoglu noted, "Demand in services continued at a certain level and it will continue, while the data suggests the economy will grow at around 3%, mainly driven by services." He further added, "Domestic and foreign de mand led to a revival in the industry sector, though data showed that problems in exports, especially to the EU, are on the rise, as competition and pricing are the main barriers against the growth of industry."