Eco­nomic cri­sis in Europe forces down­shift in Turkey,

Turkish Review - - CONTENTS - By İsa Yazar

De­spite the pos­i­tive macroe­co­nomic in­di­ca­tors, the cur­rent ac­count deficit con­tin­ues to be an is­sue for the Turk­ish econ­omy. The three-year Mid-term Pro­gram pre­scribes a slow­down in growth. This ‘down­shift’ has fixed the rate of growth at 4-5 per­cent. High-speed eco­nomic growth has been re­vised due to the cur­rent re­ces­sion in Europe, drop­ping from 7.5 per­cent to 4 per­cent for the cur­rent year Many Euro­pean coun­tries are feel­ing the pres­sure as the eco­nomic cri­sis con­tin­ues. While Turkey ap­pears to be buck­ing the trend and shows lit­tle if any sign of an eco­nomic down­turn, it is un­likely that it will be able to es­cape reper­cus­sions from the re­ces­sion in Europe in the mid-to-long term. De­spite the pos­i­tive macroe­co­nomic in­di­ca­tors, the cur­rent ac­count deficit con­tin­ues to be an is­sue. The eco­nomic ad­min­is­tra­tion has put in place a se­ries of mea­sures to re­duce the im­pact of the re­ces­sion and lower the cur­rent ac­count deficit. The three-year Mid-term Pro­gram pre­scribes a slow­down in growth. The Mid-term Pro­gram, which charts Turkey’s course for the next three years, also pro­vided for price hikes through an in­crease in Spe­cial Con­sump­tion Tax (ÖTV) im­posed on var­i­ous con­sumer prod­ucts. Taxes were in­creased, start­ing with those on large mo­tor ve­hi­cles, to­bacco prod­ucts, al­co­holic bev­er­ages and cell phones. This aims to push down the cur­rent ac­count deficit by re­duc­ing im­ports. The slow­down in im­port­fu­elled growth should also have a fa­vor­able im­pact on the cur­rent ac­count deficit. The deficit, es­ti­mated at $71.7 bil­lion by year end, is ex­pected to drop to $67.7 bil­lion within three years. In ad­di­tion, price in­creases are fore­cast to con­trib­ute an ad­di­tional TL5.5 bil­lion in taxes. The aim, there­fore, is to make the Turk­ish econ­omy more resistant to re­ces­sion by boost­ing in­come.

Un­em­ploy­ment at three-year low

Em­ploy­ment is an area on which the gov­ern­ment will put par­tic­u­lar fo­cus in the com­ing term. The cre­ation of jobs for 1.5 mil­lion peo­ple is an­tic­i­pated, while the av­er­age un­em­ploy­ment rate of 10.5 per­cent fore­cast for the cur­rent year is ex­pected to drop to 9.9 per­cent by 2014. Mean­while, the re­duc­tion in job­less­ness achieved by Turkey after the eco­nomic re­ces­sion con­tin­ues. The un­em­ploy­ment fig­ure for July was just 9.1 per­cent -- the low­est in 38 months. The past four months have seen av­er­age un­em­ploy­ment rates stay be­low 10 per­cent. Fig­ures from July show that the num­ber of em­ployed rose by 1.475 mil­lion in the year to date, tak­ing the to­tal fig­ure up to 24.953 mil­lion. The num­ber of un­em­ployed fell to 2.509 mil­lion, a re­duc­tion of 273,000.

The num­ber of regis­tered em­ployed reached an un­prece­dented 17.52 mil­lion in June, up from 16.196 mil­lion at the be­gin­ning of the year, rep­re­sent­ing an 856,000 in­crease in the num­ber of regis­tered em­ployed in the first half of 2011. The big­gest in­crease was seen in work­ers re­ceiv­ing So­cial Se­cu­rity In­sti­tu­tion (SGK) ben­e­fits and civil ser­vants: The num­ber of civil ser­vants in­creased by ap­prox­i­mately 80,000, while work­ers re­ceiv­ing SGK ben­e­fits rose by 740,000. This, cou­pled with the in­crease in pre­mium gains, led to a sig­nif­i­cant in­crease in pub­lic rev­enue. SSK rev­enues to­taled TL95 bil­lion in 2010, but reached TL60 bil­lion in the first half of 2011 alone. This in­di­cates that there will be an

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