Building Up a Real Sector Business Confidence Index for Turkey

The two major aims of this study are, firstly, to receive valuable insight into the Business Tendency Survey of the Central Bank of the Republic of Turkey and, secondly, to construct a real sector confidence index by using the questions of the Business Tendency Survey. The most important motivation behind constructing a real sector confidence index is to provide an indicator of short-term business conditions for economic policy makers and business managers by examining business managers' views on general business conditions and their future anticipations. The real sector confidence index is constructed in accordance with statistical criteria and economic theory. Afterwards, the performance of the index in tracking the cyclical features of industrial production index is tested.