Turkey Employment and Unemployment February 2008

Working age population increased by 737 thousand in the period of February 2008 compared to the same period of the previous year

While non-institutional civilian population increased by 764 thousand persons and has reached to 69 million 372 thousand persons, non-institutional working age civilian population has increased by 737 thousand and has reached to 49 million 672 thousand persons in the period of February 2008.


Non-agricultural employment increased by 355 thousand


Number of employed persons increased by 104 thousand persons compared to the same period of the previous year and has reached to 20 million 162 thousand persons in the period of February 2008. Agricultural employment decreased by 252 thousand persons and non-agricultural employment increased by 355 thousand persons in this period.



Of those who were employed in February 2008; 23.6 % was employed in agriculture, 21.3 % was employed in industry, 5.1 % was employed in construction and 50.1 % was employed in services. Employment in agriculture decreased by 1.3 while that industry increased by 1 percentage points, construction increased by 0.4. The share of services was realized without any change.


Number of unemployed persons increased by 55 thousand persons compared to the same period of the previous year and has reached to 2 million 642 thousand persons in Turkey. Unemployment rate realized as 11.6 % with 0.2 points increase. Unemployment rate increased to 13.4 % with a 0.4 percentage points increase in urban areas and reached to 8.5 % with 0.3 percentage points decrease in rural areas.



Non-agricultural unemployment rate realized as 14.2 % without any change compared to the same period of the previous year in Turkey. The rate is realized as 13.4 % with a 0.1 percentage points increase for male and 17.5 % for female with a 0.2 percentage points decrease. In this period, of those who were unemployed.

Turkey Consumer Confidence April 2008

Turkey's consumer confidence index fell 6.99 percent month-on-month in April to a data series low of 76.24 points, the Turkish Statistics Institute said on Friday.
In March the index had fallen 6.44 percent month-on-month to 81.96 points, after falls in January and February.




The index, which was launched in December 2003, assesses consumers' spending behaviour and expectations, and the 100-point mark divides pessimism from optimism.

The index has only once fallen more sharply month-on-month - in June 2006 when it dropped 7.9 percent during a period of financial turbulence in Turkey, when the central bank was forced to raise interest rates sharply. With a background of rising inflation, the central bank hiked rates on Thursday for the first time since 2006.

Consumer confidence readings are going from bad to worse, as economic pressures continue to mount. There has evidently been a substantial decline in perceptions of the general economic situation.

Turkey's economic growth - which had been averaging 6.8 percent a year since a crisis in 2001 - has slowed down in the last year or so and full-year 2007 growth of 4.5 percent fell short of a 5.0 percent government target.




The government has lowered its 2008 gross domestic product growth forecast to 4.5 percent from an initial target of 5.5 percent, although the International Monetary Fund expects growth to come in at a lower 4.0 percent.

The statistics institute said the fall in the confidence index was related to a deterioration in consumers' expectations on purchasing power, the economic outlook and job opportunities in the coming period.

Turkish Central Bank Raises Base Rate in May

Turkey's central bank raised its benchmark interest rate by a half point this week, paring six cuts in the past nine months after the inflation rate reached a 12-month high and the government said it would loosen spending limits. The Ankara-based Turkiye Cumhuriyet Merkez Bankasi increased the overnight borrowing rate for the first time in almost two years to 15.75 percent, higher than any other rate in Europe.



The bank was forced to reverse its policy of cutting rates after rising global oil and food prices helped push inflation in April to 9.7 percent. Turkey will miss its inflation target, currently at 4 percent, for a third consecutive year, central bank Governor Durmus Yilmaz said on April 30.



The secondary impact of a weakening in the lira and rising global energy and food prices would create a ``temporary'' increase in the inflation rate, the bank said in a press release after the decision. The bank would take further ``measured'' interest rate increases if necessary.

The Committee expects inflation to start decelerating in the last quarter of the year, ending 2009 at around 6.7 percent, as forecasted in the April Inflation Report. In the forthcoming period, monetary policy decisions will be geared towards keeping inflation close to these forecasts. Therefore, it is important that economic agents align their expectations with the Central Bank forecasts. The Central Bank will continue to take the necessary measures to prevent the potential second-round effects of the adverse developments in food and energy prices.

Accordingly, the Committee will consider the possibility of a further measured rate hike in the next meeting. The extent and timing of possible future rate hike will depend on developments in global markets, external demand, fiscal policy implementation, and other factors affecting the medium term inflation outlook.

On May 3, three days after Yilmaz said the bank was poised to increase rates, the government announced it was loosening its budget targets to step up spending on infrastructure and job creation. A $10 billion International Monetary Fund lending accord designed to slow inflation by curbing spending expired on May 10.

The government is raising spending after the economy expanded 3.4 percent in the fourth quarter of 2007, the same pace as the previous three months and the slowest in almost six years.

If the bank wants to offset inflation by nudging the lira back up then it seems to be having some of the desired effect since the lira posted its biggest weekly gain versus the dollar since September last week. The lira rose to the highest level in two months against the dollar, rising 1 percent on Friday to 1.2315 by 6:40 p.m. in Istanbul, its strongest level since March 19. It advanced 2.8 percent over the week, in the process paring its deline of 5 percent so far this year.


Extract From the Central Bank April Inflation Report

Inflation Developments

Food, energy and other commodity prices continued to have adverse
effects on inflation in the first quarter of 2008. Oil prices continued to rise and
averaged around 100 USD per barrel. Annual food price inflation remained at
elevated levels, reaching 13.4 percent in March. Moreover, rising financial
volatility and declining risk appetite on the back of ongoing global uncertainties
have led to exchange rate movements which had first round effects on March
inflation. Consequently, inflation rose to 9,15 percent at the end of the first
quarter, breaching the upper limit of the uncertainty band.

As a consequence 6.13 percentage points of the 9.15 percent annual CPI
inflation in March resulted from the food and energy items. Annual inflation in
core goods and services remained flat over the previous quarter, confirming
that the rise in inflation can be mostly attributed to factors beyond the control
of the monetary policy. Annual inflation in CPI excluding food,
energy and tobacco items was at 4.8 percent at the end of the first quarter.

Turkey Industrial Output March 2008

The Turkish monthly Industrial Production Index reached 150.4 in March increasing, 2,4 % in March of 2008.



In the sub sectors level of industry, mining sector increased 12.4 %, manufacturing industry was up 1.9 %, electricity, gas and water increased by 3.8 % in March of 2008compared with same month of the previous year.




When the three-month average of 2008 is also compared to previous year, total industry sector increased 6.8 %, mining sector increased 10.9 %, manufacturing industry sector increased 6.3 %, electricity, gas and water sector increased 9.8 %.

The highest rates of increase were in the manufacture of motor vehicles, trailers and semi-trailers (26.0%), manufacture of electrical machinery (14.3%), wood and of products of wood and cork (12.6%).

Turkey, the IMF and Infrasturcture In the Kurdish East

The $10bn loan agreement between Turkey and the International Monetary Fund which expired earlier this month removed what many have seen as an anchor for Ankara’s economic and structural reform programme just at the moment when Turkey's economy is passing through a tricky moment, and by all apearances heading into a slowdown. The expiry of the agreement, originally designed to help Turkey out of a crippling financial crisis seven years ago, brings to an end one of the most intense and, in many respects, most successful of the fund’s current operations. Turkey got its first loan from the IMF in 1961.


Investors viewed the agreement, along with the prospect of European Union membership, as the two main anchors of the government’s reform agenda. The fact that the agreement is not being immediately replaced in the context of what is evidently a deteriorating global environment, worries many analysts who have become concerned that both the reform agenda and EU membership prospects may be faltering.


The $10bn agreement was obviously valuable for both parties since it achieved some notable successes, and has allowed the IMF to present Turkey as one of its more positive policy stories over the past five years. Lorenzo Giorgianni, head of the IMF’s Turkey monitoring team, said recently that the country had over-achieved in some key respects, given that some targets – such as GDP growth, public finances, debt ratios and reserves – were all above the initial targets.

However since the ending of the agreement fears have been voiced that the Turkish government may be loosening fiscal policy, and as evidence of this they point to this week's announcement by the government of the details of a $12bn additional investment package. However, before reaching any hasty decisions here we would do well to think about this package in more detail, about the value it may have at the present time in macro demand management terms, and in particular about its infrastructural focus and the fact that it is directed towards the Kurdish dominated provinces in the south-east, and thus as well as the immediate economic objectives the initiative could be seen as taking one tentative step in the direction of countering separatist sentiment and improving living standards in what is one of Europe’s most impoverished regions.

Recep Tayyip Erdogan, the Turkish prime minister, has said that as well as the infrastructural components the package will also include funding for cultural, educational and landmine-clearance initiatives. The entire investment is expected to create up to 3.8m jobs and free up for farming some 1.8m hectares of land.

Erdogan said TL1bn ($802m, €509m, £405m) of new funding would be added to the roughly TL15bn earmarked for spending in the region in April, when the government reduced some fiscal targets agreed with the International Monetary Fund in order to boost public spending between now and 2012. Mehmet Simsek, Turkey’s economy minister and also the person responsible for liaison with the IMF has indicated that the government wants to continue a close relationship with the fund, but it is seeking greater flexibility to raise public spending to address the huge backlog in infrastructure spending. Equally, at a time when private domestic demand is being held so tightly in check by the high interest rates being (sensibly) maintained by the central bank increasing public demand on worthwhile projects might seem like a reasonable policy option to maintain some growth momentum.

Mr Erdogan, speaking in Diyarbakir, Turkey’s main Kurdish city, described the package as “a well defined, scheduled, and funded action plan to remove regional differences in economic and social development, unemployment, and migration”. He said it would “constitute a social restoration to strengthen our social fabric, unity, and integrity”.

Most of the money is to be spent on irrigation and hydroelectric schemes under the banner of the South Anatolia Project. This vast state project, initiated in the 1970s, aims to harness the region’s rivers, including the Tigris and Euphrates, and to boost farm production and electricity generation. Given that one of the problems facing Turkey at the present time has been the high price of food products and energy, so anything which is realistic in policy terms and can help improve the situation in the longer term can only be welcomed I feel.

Turkey Foreign Trade March 2008

Turkish exports increased by 42.9% between January-March when compared with the same period of the last year. According to the provisional data from Turkstat, in March 2008 exports were up by 27.6% year on year and totalled 11,429 Million Dollars, while imports were up by 26.9% and totalled 16,792 Million Dollars.



Over the same period, the foreign trade deficit was up by 25.4%, and reached 5,363 Million Dollars. In March 2008 exports coverage of imports was 68.1% while it was 67.7% in March 2007.




51.1% of Turkey's exports went to the European Union. In the January-March period exports to the EU totalled 16,937 Million Dollars and increased by 26.6% over 2007.


In January-March 2008, Turkey's main export partner was Germany with 3,402 Million Dollars an increase of 25.1%. In March 2008, exports to Germany was 1,166 Million Dollars and increased by 12.9% in comparison with the same period of the previous year. For exports, Germany was followed by Italy (705 Million Dollars), the UK (677 Million Dollars), France (598 Million Dollars), Russia (598 Million Dollars) and UAE (510 Million Dollars).

In January-March 2008, while the European Union Countries were the most intensive country group for imports (18,996 Million Dollars), followed by other European Countries (10,598 Million Dollars), Asian Countries (13,517 Million Dollars) and Free Zones in Turkey (357 Million Dollars).

In March 2008, the top country for Turkey’s imports was Russia (2,483 Million Dollars), records for imports range from Germany (1,633 Million Dollars), China (1,308 Million Dollars), Italy (974 Million Dollars) and the USA (864 Million Dollars).

For January-March 2008, road vehicles and their parts had by far the highest value of goods exported at 5,259 Million Dollars and then, iron and steel 2,742 Million Dollars, machineries, mechanical appliances, boilers, equipments and parts 2,531 Million Dollars, gold, pearl and other precious stone and products, coins 2,523 Million Dollars, articles of apparel and clothing accessories 2,132 Million Dollars.

At the same period, the top categories for imports were mineral fuels and mineral oils (10,932 Million Dollars) and then machineries, mechanical appliances, boilers, equipments and parts (5,858 Million Dollars) and iron and steel (5,357 Million Dollars).

New Turkey Deal With IMF In the Offing

The Turkish government outlined a multi-billion dollar public spending programme late last week, with the explicit intention of losening fiscal policy ahead of a new, and probably much less stringent, agreement with the International Monetary Fund. All current evidence suggests the Turkish government will seek a looser arrangement with the IMF when the agreement ends next Saturday. Turkey is expected to sign a “precautionary stand-by arrangement” that will allow for some fund oversight of fiscal policy but will not include guaranteed funding. Indications from the IMF suggest that they are not unsympathetic to the Turkish viewpoint.

The finance ministry said it was revising some key budget targets between 2008 and 2012 to release about 17bn new Turkish lira (YTL) ($13.4bn, €8.7bn, £6.8bn) for investment in infrastructure. The announcement is a sign that the government, pressured on the one side by strict IMF oversight and on the other by a serious political crisis, intends to pursue an ambitious public spending programme, much of it concentrated in Turkey’s unsettled south-eastern region.

The government’s ability to spend on infrastructure has been curtailed since 2002 by a $10bn (€6.5bn, £5bn) loan agreement with the IMF that set strict targets for public finances. The most visible of these was a primary surplus – the budget surplus before interest payments – that was once as high as 6.5 per cent of gross domestic product.

Kemal Unakitan, the finance minister, said the government was revising the primary surplus target down to 3.5 per cent for 2008 and to 2.4 per cent in 2012, after an upward revision of the size of the economy this year.

This year's budget aimed for a so-called primary surplus, excluding interest payments, equal to 5.5 percent of estimated economic output. Since then, the government's statistics office has revised its GDP forecast, increasing it by about a third and effectively reducing the budget target to about 4.2 percent. The primary surplus goal will be 3 percent next year, 2.7 percent in 2010, 2.5 percent the following year, and 2.4 percent in 2012.


The government aims to spend as much as 17 billion liras ($13.5 billion) over the next five years on the Southeast Anatolia Project, a $32-billion chain of hydro-electric dams and irrigation systems in the mainly Kurdish southeast, according to Economy Minister Mehmet Simsek. The project could ``double or triple'' farm output in area, he said.

The shift to increased public spending is unlikely in principle to worry the financial markets, given the underlying soundeness of Turkey’s YTL 750bn economy. What might concern investors, however, is that it coincides with an economic slowdown and heightened political tensions. There are indications that the central bank may well raise interest rates later this month to curb inflation, currently running at 9.7 per cent. Of course another reading which could be put on any decision to raise rates is that higher interest rates serve to underwrite the lira at a time of global uncertainty. If the bank fails to raise rates then this can be seen as a weakening in the will to fight inflation and the bank could lose credibility. But Turkey's economy has slowed considerably, inflationary pressure is more a by-product of global prices than of excess domestic demand, and arguably some parts of the economy need a boost. Hence the decision to loosen fiscal policy even as monetary policy is tightened.

The five-year investment programme includes funds to boost agricultural production in an attempt to keep food prices from rising excessively. However as we are seeing in one country after another, rising domestic food prices at a time when global prices are pushed up and up is one of the inevitable downsides of economic openness.

Turkey Inflation April 2008

The Consumer Price Index was up on the previous month by 1,68%, on December of the previous year by 4,82%, on same month of the previous year by 9,66% and on the twelve months moving averages basis by 8,33% in April 2008.



The highest monthly increase was 11,69% in the index for clothing and footwear by main expenditure groups. The indices rose for transportation 2,38%, for hotels, cafes and restaurants 1,74%, for food and non-alcoholic beverages 1,01%, for miscellaneous goods and services 0,79%, for housing 0,72%, for furnishings and household equipment 0,52%, for education 0,12%, for health 0,06%, for communication 0,04%, for alcoholic beverages and tobacco 0,03%, while the index declined for recreation and culture -0,13%.

The highest annual increase was in the index for housing.

The highest increase was 15,22% in the index for housing compared with the same month of the previous year. Food and non-alcoholic beverages (13,48%), hotels, cafes and restaurants (12,77%), miscellaneous goods and services (9,84%) were the other indices where high increases were realised.

The highest monthly increase was 2,99% in TRB2 (Van, Muş, Bitlis, Hakkari) among 26 regions (NUTS2).

The highest monthly increase in CPI by regional basis was in TRB2 (Van, Muş, Bitlis, Hakkari) (2,99%). The high increases in CPI were recorded in TRB2 (Van, Muş, Bitlis, Hakkari) region (6,72%) compared with December of the previous year, in TRB2 (Van, Muş, Bitlis, Hakkari) region (12,49%) compared with the same month of the previous year and in TRA2 (Ağrı, Kars, Iğdır, Ardahan) (9,69%) on the twelve months moving averages basis.

Prices of 299 items increased in total of 454 items covered in the index.

In April 2008 within average prices of 454 items in the index, average prices of 73 items remained unchanged while average prices of 299 items increased and average prices of 82 items decreased.

Turkey Producer Prices April 2008

Turkey's producer price index rose by 4.50% over the April 2008 level. The index was up on December 2007 by 11.04%, on March 2007. The current twelve month average is now 6.39%.

Monthly oncreases were 2.87% in the index for agriculture and 4.90% the index of industry.

Th agriculture PPI increased 7.53% compared with December 2007, 18.83% compared with April 2007 and 11.98% on a twelve month average basis. The PPI for industry increased 11.91% compared with December 2007, 13.59% compared with April 2007 and 5,13% on a twelve month average basis.



The highest monthly increase in the PPI of industrial activities was recorded 19.40% in the index for metallic minerals.

There were increases 4.69% in the index for mining and stone quarrying, 4.92% in the index for manufacturing industry and 4.66% in the index for electricity, gas and water by sub-sections of industry.

The high rates of monthly increase in PPI by sub divisions were in the industrial price indices for metallic minerals (19.40%), for coke and refined petroleum (11.63%), for basic metal industry (11.62%), for crude petroleum and natural gas production (10.12%), for machinery and equipment (8.06%).

On the other hand index declined for tobacco products (-0,01%) compared with the previous month.

The high rates of annual increase were in the industrial price indices for metallic minerals (53,00%), for coke and refined petroleum (47,81%), for crude petroleum and natural gas production (47,75%), for basic metal industry (27,94%), for food products and beverages (18,96%).

Prices of 464 items increased in total of 756 items covered in the index.

In April 2008 within average prices of 756 items in the index, average prices of 189 items remained unchanged while average prices of 464 items increased and average prices of 103 items decreased.

Turkey's Central Bank Maintains Its Inflation Forecast Despite Accepting It Isn't Valid

Turkey’s central bank said on Wednesday that inflation in 2008 would be nearly double its official target in the face of rising energy and food prices, and warned of higher interest rates. Durmus Yilmaz, central bank governor, said inflation for this year would probably come in at 9.3 per cent, compared with a target range of 4.1-6.9 per cent it set in December. He said the bank, which adopted official inflation-targeting as the basis of its monetary policy in 2006, would probably not meet its long range 4 per cent target for another two years.

Mr Yilmaz blamed the deteriorating inflation outlook on rising energy and food prices. He said the soaring cost of oil and gas could add five percentage points to inflation next year. Rising food prices are also beginning to worry the government, which announced earlier this month that it would abolish import duties on rice

The bank has already missed its inflation target for 2006 and 2007. In an interview with the Financial Times earlier this year, the governor admitted missing the target for two successive years was “a huge credibility problem for the central bank”.

He argued at a news conference on Wednesday that there would have been no point in changing the official target in mid-year.