Page 28 - TURKRptJul20

delays on top of already delayed repayments could weigh on private lenders’ moribund hopes for profitability.
Finance Minister Berat Albayrak stated on April 12 that state lenders had postponed TRY60bn worth of loan and credit card debt repayments, while calling on private banks to also offer delays. Eventually, they did.
In April, 38,000 Turks used a credit card for the first time. There were 71mn credit cards and 168mn bank cards in the country of 83mn people as of end-March, according to latest data from the Interbank Card Center (BKM).
Virus-driven stockpiling​. In the week ending June 5, expenditures on supermarket items was the top category for card payments, accounting for 21%, or TRY4.1bn, of such payments. The weekly data is volatile but consumers in Turkey appear to have spent TRY4-5bn per week via card transactions on supermarket items since the beginning of March when COVID-19-driven stockpiling began, up from the TRY3.2bn average seen across the first quarter of the year.
There was TRY1.9bn of card spending on consumer electronics in the week ending June 5, up from TRY1.3bn a week ago. The government has been hiking import tariffs on this product category since April but it hasn’t managed to stop Turks buying imported electronics.
Clothing—card spending for which was up TRY516mn w/w to TRY1.2bn—and, unsurprisingly, fuel—up TRY411mn to TRY1bn—were among items with the highest expenditure increases in the week.
The rolling four-week average of credit card purchases, an indicator with a strong correlation to domestic demand, is barely catching up with levels seen a year ago, Bloomberg reported on June 16.
Data collected by Google show Turks have proved reluctant to return to offices or go out since the pandemic restrictions were lifted from late May.
“It is now commonplace to cite data on everything from traffic congestion to port arrivals. However, it is important to understand what these data do and don’t tell us,” Neil Shearing of Capital Economics wrote on June 15 in a note entitled “Tracking the recovery”.
“They are clearly narrow in their coverage and fail to capture activity in key sectors. What’s more, they tell us almost nothing about the state of demand, which will be critical to determining the scale and speed of the economic recovery. More car journeys do not necessarily translate into more consumer spending,” he added.
So, for Turkey, the card payment data may be more instructive than Google activity data when trying to get an idea of trends in private consumption.
In Turkey’s specific situation, the official data certainly does not reflect the realities people are contending with, though opposition politicians’ attempts to address this matter have been rebuffed by the ruling coalition.
Household consumption in Turkey in the first quarter stood at TRY610bn, or 57% of overall GDP, in current prices. Card payments amounted to TRY249bn, equivalent to 41% of household consumption in official GDP.
In the recorded second quarter to date (from April 1 to June 5), card payments totalled TRY155bn. A lower figure of TRY153bn was seen in Q2 2016, but the remaining 25 days are awaited for ascertaining the overall Q2 2020 figure.
Payments with credit cards in Turkey declined by 13% y/y in May to
28​ TURKEY Country Report​ July 2020 ​ ​www.intellinews.com