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.