Consumer Confidence Falls 7.7%, Factories Get Busier — October 2026 Bulletin

İTOSAM — Weekly Economic Bulletin | 23 October 2026

Translation and analysis of the Istanbul Chamber of Commerce economic bulletin

İTO Center for Strategic Studies — period 19 to 23 October 2026

Covered: the UNCTAD Trade and Development Report, economic tendency statistics and the real sector confidence index, the consumer confidence index, financial services statistics and confidence, the capacity utilisation rate, the export producer price index, domestic household tourism, and TÜİK's Higher Education Brain Drain Statistics

Last month's picture has been reversed. The 25 September bulletin said that "expectations are improving in every sector, with one persistent exception — construction". This month it is the other way round: all three confidence indices fell at the same time, and the slump in consumer confidence (−7.7% in one month) is the largest monthly fall in the whole series. By contrast, the capacity utilisation rate and firms' investment expectations went up. In other words, the supply side is improving while the household demand side is collapsing.

1. UNCTAD: Trade and Development Report — October 2026

"Global growth is expected to slow to 2.6% in 2026"

According to UNCTAD's assessment, global economic growth is expected to slow from 2.9% in 2025 to 2.6% in 2026, and to show a limited recovery in 2027 at 2.7%. Inflationary pressures, tight monetary policies and rising borrowing costs are constraining consumption and investment, and energy-driven supply shocks are also increasing the risks to the global economic outlook.

Among developing economies, growth performance varies; India, with a growth rate of 7.3% in 2026, leads the large economies that are driving global expansion. By contrast, economies with a high dependence on imports show a more fragile outlook because of rising financing costs and tightening financial conditions.

Two estimates, two different numbers — and both correct: last week the IMF put global growth for 2026 at 3.1%; this week UNCTAD says 2.6%. The 0.5-point difference comes mainly from the weighting method: the IMF weights countries by purchasing power parity (which raises the weight of fast-growing emerging economies), and UNCTAD by market exchange rates. When citing these figures, always state the source.

"World trade holds its resilience, artificial intelligence steers growth"

World trade is proving more resilient than expected, although its growth is very limited. World trade, which grew 4.4% in real terms in 2025, is expected to expand by about 4.0% in 2026 — a rate well above the levels forecast when the conflicts in the Middle East began. Strong demand for products related to artificial intelligence, especially the advanced IT equipment used in new data centres, plays a decisive role.

According to UNCTAD's analysis of the advanced server systems in AI data centres, 82% of the value added generated is concentrated in four supplier groups: chip design, chip manufacturing, memory and storage, and assembly and testing. On the other hand, a fall of about 7.0 percent in official development assistance in 2026 and greater volatility in foreign investors' portfolio flows are making financing conditions harder for developing countries. As demand for AI products moderates, growth in services trade is expected to outpace growth in goods trade in 2027.

A point that bears directly on Turkey: UNCTAD considers economies "with a high dependence on imports" to be the most fragile group. With imports of USD 353.6 billion against exports of USD 275.2 billion (16 October bulletin), Turkey falls squarely into this category — especially given that its entire current account deficit comes from energy and gold.

A second point: the 7 percent cut in development assistance and the volatility of portfolio flows are the same external backdrop identified in the 14 August bulletin with the 4.7 percent US Treasury yield — external financing is becoming more expensive and less stable.

2. Economic tendency statistics and real sector confidence index — October 2026

The seasonally adjusted real sector confidence index fell 1.4 points in October from the previous month, to 101.1. The unadjusted index also fell 2.2 points, to 99.8 — in other words, below the 100 threshold.

According to the survey results, the weight of those who assess current total orders as below the seasonal normal increased. For finished goods stocks, too, those reporting them as below normal stood out. For the next three months, expectations of rising output and domestic market orders weakened, while expectations of rising export orders and employment strengthened. Expectations of rising fixed capital investment expenditure over the next twelve months also went up.

Assessments of rising unit costs over the past three months were unchanged, while expectations of rising costs over the next three months strengthened slightly. Over the same period, expectations of rising selling prices weakened. The expected annual ÜFE at the end of the next twelve months fell 0.6 points, to 30.4%. The weight of those who assess the sector's general trend as more negative than the previous month increased.

The worst possible combination for margins: expectations of rising costs have strengthened and expectations of rising selling prices have weakened — meaning firms know costs will go up but do not believe they can pass them on to the customer. This is exactly the mechanism that took Turkish firms' net profit margin from 3.75% to 2.08% (18 September bulletin).

But one important positive point: expectations of fixed capital investment over the next twelve months went up — whereas in the 25 September bulletin this same item was one of the factors pulling the index down. Given that construction is a direct output of fixed investment, this is the first forward-looking signal for next year's project pipeline.

A third signal: twelve-month producer inflation expectations fell to 30.4%. Firms expect cost inflation to slow — a number that can be cited when adjusting long-term contracts.

3. Consumer confidence index — October 2026

The consumer confidence index fell 7.7% month on month in October 2026, to 84.8. Households' current financial situation fell 9.3% from the previous month, to 68.3. Expectations for the general economic situation over the next twelve months also fell 9.0% month on month, to 81.7.

Among the sub-indices, the largest change was in the probability of buying a car over the next twelve months index; it plunged 17.6% from the previous month, to 24.7.

The largest monthly fall in the whole series. The path of consumer confidence: 89.8 (July) → 90.8 (August) → 91.9 (September) → 84.8 (October). Three months of gradual improvement were wiped out in one month, and the index dropped below its two-year average (84.9).

More important than the fall itself is how uniform it is: last month only one sub-index was negative; this month all five sub-indices are negative. And the sharpest falls are in "expectations for the general economic situation" (−9.0%) and "current financial situation" (−9.3%) — in other words, both today's assessment and the outlook for the future have worsened at the same time.

The 17.6 percent plunge in the car-purchase index is the most important warning for the property market. Cars and homes are both large, financing-driven purchases, and the car index usually reacts earlier than housing, because its decision cycle is shorter.

The 25 September bulletin said that the Turkish household is "poorer but more determined to buy", and that this behaviour of front-running inflation was bringing buyers to the housing market. This month even that motive weakened: the intention to buy durable goods fell from 108.8 to 102.7, close to the 100 threshold.

Practical implication: if this fall continues for another month, it will show up in house sales statistics with a lag of two to four months — that is, around January and February. The three-month recovery in house sales we saw in the 16 October bulletin (−17% → −14.7% → −9.3%) may be at risk. For projects with sales this year, speeding up the closing of deals under negotiation makes more sense than waiting for a better price.

4. Financial services statistics and confidence index — October 2026

The Central Bank of Turkey announced the financial services confidence index for October. Accordingly, the index fell 3.2 points from the previous month, to 155.2. Looking at the sub-components, business conditions over the past three months and demand for services pulled the index down, while expected demand for services over the next three months made a positive contribution.

For the first time in this series, all three confidence indices turned negative at the same time. The path of the financial services index: 150.4 (August) → 158.4 (September) → 155.2 (October) — in other words, half of last month's jump has been given back.

But the pattern in the sub-components is the same "bad past, better future" we saw in August. The financial sector usually turns earlier than the real sector; this two-month swing shows that the turn has not yet settled.

5. Capacity utilisation rate — October 2026

According to Central Bank data, the seasonally adjusted capacity utilisation rate (KKO-MA) in manufacturing industry rose 0.2 points in October 2026 from the previous month, to 74.3%. On an annual comparison, the rate is 0.3 points higher than its 74.0 percent level of October 2025.

By product group and on a monthly basis, the utilisation rate rose 0.9 points to 72.3% in consumer goods, 2.1 points to 68.5% in durable consumer goods and 0.6 points to 73.1% in non-durable consumer goods. In intermediate goods the rate fell 0.1 points to 74.4%, and in capital goods it rose 0.3 points to 73.4%.

On an annual basis, five of the seven indices in the table rose. The largest increase, 1.6 points, was in capital goods, and the largest decrease, 0.8 points, in durable consumer goods.

The only positive section of this bulletin. Last month durable consumer goods were at the bottom of the table at 66.4%, having plunged 3.9 points year on year; this month they have recovered 2.1 points, to 68.5%. Capital goods, with 1.6 points of annual growth, have the largest increase in the table, reaching 73.4%.

In other words, factories have got busier — in the same month that consumer confidence plunged 7.7%. This divergence usually means that production is filling inventories or responding to export orders, not responding to domestic demand. The strengthening of export order expectations in the real sector survey confirms this reading.

6. Export producer price index (YD-ÜFE) — September 2026

The export producer price index rose 2.82% in September from the previous month, and the annual increase was 33.64%.

Looking at monthly changes in industry, the largest increase was 15.45% in energy, followed by mining and quarrying at 3.15%. On an annual basis, energy's increase was 130.31%.

Energy has passed double and is approaching two and a half times. Annual growth in energy export prices: 106.24% (August) → 130.31% (September), and 15.45% in a single month. This is the sixth consecutive bulletin in which energy leads price growth, and its momentum is increasing, not decreasing.

By contrast, capital goods have risen only 20.66% year on year — about 11 points below consumer inflation and almost unchanged from the previous month (20.59%). Durable consumer goods became only 0.35% more expensive in a month.

Practical implication: the gap between energy and equipment is opening up. For any project, energy costs should be contracted separately, with an independent adjustment clause, while buying equipment and machinery is still in a favourable window — which is consistent with the 37 percent spare capacity in the machinery sector in the 25 September bulletin.

7. Domestic household tourism — second quarter of 2026

In the second quarter (April, May and June), 13 million 549 thousand residents of the country travelled. The total number of their domestic trips involving a stay of one night or more fell 3.6% from the same quarter a year earlier, to 16 million 467 thousand trips. Travellers stayed 85 million 890 thousand nights in this quarter, and the average number of nights stayed was 5.2.

Domestic tourists' travel spending in the second quarter rose 32.6% from the same quarter a year earlier, to 154.9 billion lira. 86.9% of this spending was personal spending, at 134.6 billion lira, and 13.1% was package-tour spending, at 20.3 billion lira. Average spending per trip was 9 thousand 413 lira. In the breakdown by type of spending, the largest share, 31.6%, went on food and drink, followed by transport at 25.0% and accommodation at 14.5%.

Fewer trips, more spending: the number of trips is down 3.6% but spending is up 32.6% in nominal terms — that is, about 1% real growth with inflation at 31.5%. Average spending per trip has gone from 6,848 lira (second quarter of 2025) to 9,413 lira, i.e. +37.5% — above inflation.

Food for thought on short-term rentals: accommodation's share of travel spending is only 14.5%, while food and drink take 31.6% and transport 25.0%. In other words, the Turkish domestic tourist keeps accommodation costs tight and spends the money elsewhere. A budget accommodation model, with an average stay of 5.2 nights, makes more sense than a luxury model — and the 17.6 percent growth in package-tour spending (far below the 35.2% for personal spending) shows that independent travel is winning out over package travel.

8. Higher Education Brain Drain Statistics — 2025

According to TÜİK's 2025 Higher Education Brain Drain Statistics, the brain drain rate among graduates rose 0.2 points from the previous year, to 2.2%. The rate was 2.7% for men and 1.8% for women. The highest rate was recorded in Istanbul, at 4%, and the lowest in Siirt, at 0.2%.

The brain drain rate among graduates of state universities rose from 1.7% in 2024 to 1.9% in 2025, and among graduates of foundation (private) universities from 4.3% to 4.4%.

By field of study, information and communication technologies, at 7%, ranked first, followed by engineering, manufacturing and construction, at 4.8%. Among bachelor's programmes, molecular biology and genetics stood out at 13.1%, industrial engineering at 13% and mathematical engineering at 11%.

22% of emigrating bachelor's graduates settled in Germany, 16.9% in the United States, 10.5% in the United Kingdom, 8.3% in the Netherlands and 5.2% in Canada.

Looking at the leading fields in the top five destination countries, computer engineering graduates made up 7.7% of emigrants to Germany, 7% of emigrants to the United Kingdom and 13.5% of emigrants to the Netherlands, ranking first in each. Among emigrants to the United States, electrical and electronics engineering graduates ranked first at 5.7%, and among emigrants to Canada, business administration graduates at 6%.

Two readings of this data, both important for PERGAS:

1. As an employer — hiring engineers is getting harder. The emigration rate of "engineering, manufacturing and construction" graduates is 4.8%, more than double the overall average (2.2%). And Istanbul, at 4%, has the highest rate in the country — meaning the labour market you hire from is experiencing the greatest attrition. Put this next to the CEPR finding in the 25 September bulletin (internal promotion 17% more likely in productive firms): retaining and promoting existing staff is cheaper and more reliable than replacing them.

2. As a provider of migration services — this is a demand map. The destinations are clear: Germany 22%, the United States 16.9%, the United Kingdom 10.5%, the Netherlands 8.3%, Canada 5.2%. And the applicant profile is clear too: a graduate of a foundation (private) university (rate 4.4%, more than double that of state universities), in technology and engineering fields, and living in Istanbul. If you are expanding the migration services line, these three characteristics give you your market segmentation.

9. Analytical summary

a) Confidence broke on all three fronts

Consumers −7.7% (the largest fall in this series), real sector −1.4 points, financial services −3.2 points. The unadjusted real sector index dropped below the threshold, at 99.8. Three months of gradual improvement in consumer confidence were wiped out in one month.

b) But the supply side got better

Capacity utilisation +0.2 points to 74.3%, durable consumer goods +2.1 points, capital goods +1.6 points year on year. Firms' twelve-month investment expectations went up and export order expectations strengthened. Factories are working for exports, not for the domestic market.

c) Costs are rising, selling prices are not

Expectations of rising unit costs strengthened and expectations of rising selling prices weakened — the same margin squeeze we saw in the 2025 financial statements. Export energy prices +130.3% year on year, and accelerating. The only reassuring point: twelve-month ÜFE expectations fell to 30.4%.

d) Practical implications for PERGAS

• Close the deals under negotiation. The 17.6 percent plunge in the car-purchase index and the fall in the intention to buy durable goods are leading indicators of demand for large purchases. The three-month recovery in house sales may stall in January and February. Waiting for a "better price" in this climate is high-risk.

• But do not halt new projects. Firms' twelve-month investment expectations have gone up, and construction output has turned positive year on year (16 October bulletin). Commercial and infrastructure demand follows a different path from household demand.

• Separate out energy. With 130 percent annual and 15.5 percent monthly growth, the energy adjustment clause should be independent of the general adjustment index.

• Buy equipment now. Capital goods 20.7% year on year — eleven points below inflation, for the second month in a row.

• Use 30.4% as the baseline in one-year contracts — firms' official expectation for producer inflation at the end of the next twelve months.

• For the migration line: the demand map is clear — Germany, the United States, the United Kingdom, the Netherlands, Canada; a private university graduate, in a technology or engineering field, living in Istanbul.

• For hiring: an engineer emigration rate of 4.8%, and Istanbul with the highest rate in the country — retaining the existing team is the priority.

• What to watch next month: will consumer confidence bounce back, or is this the start of a trend? Will construction output record a second positive month? Will the rent-price gap in Istanbul persist?

This document is a translation and analysis of the weekly economic bulletin of the İTO Center for Strategic Studies (İTOSAM) dated 23 October 2026. Data is drawn from the sources cited in the bulletin (UNCTAD, TÜİK and TCMB). The sections headed "Reading", "Note", "Warning", "Summary" and "Implications" are added commentary and are not part of the original bulletin text. The "business expectations" chart is a qualitative representation of the direction of the changes described in the bulletin text and is not a published figure; the September figure for the car-purchase index has been reconstructed from the −17.6 percent rate of change, and the 2024 figures for men and women in the brain drain chart are estimates. Comparisons with 31.5 percent consumer inflation and references to earlier data are based on the bulletins of 7 August to 16 October 2026. In the Persian edition, months are given with Persian names for readability: Mordad ≈ August, Shahrivar ≈ September, Mehr ≈ October.