Economic crisis in Europe forces downshift in Turkey,
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