CHP chimes in

The CHP’s eco­nomic staff has pre­pared its own as­sess­ment of Turkey’s econ­omy

Dünya Executive - - COVER PAGE - CANAN SAKARYA – ANKARA

The Repub­li­can Peo­ple’s Party (CHP) has come out with its own re­port card on the econ­omy, pre­pared by the party’s eco­nomic staff and pre­sented to CHP leader Ke­mal Kil­ic­daroglu, its find­ings are as fol­lows:

Bud­get deficit

The bud­get deficit tar­get for end-2019 was an­nounced as TRY 80.6 bil­lion. In the first six months of the year, bud­get deficit reached TRY 78.6 bil­lion. Thus, the tar­get was prac­ti­cally reached in six months. A break­down of the bud­get shows that in­ter­est ex­pen­di­tures in­creased rapidly com­pared to the pre­vi­ous year, but rev­enues showed a lim­ited in­crease be­cause of the econ­omy in cri­sis.

Un­em­ploy­ment

Ac­cord­ing to of­fi­cial fig­ures, the num­ber of un­em­ployed in­creased by 1,116,000 com­pared to the same pe­riod last year to 4,202,000, mak­ing the num­ber of un­em­ployed in broader terms 7,755,000. Sea­son­ally-ad­justed un­em­ploy­ment in­di­ca­tors have been on the rise for 14 months, go­ing from 10.3 per­cent in the same pe­riod of the pre­vi­ous year to 13.8 per­cent this year.

Com­pa­nies go­ing out of busi­ness

The statis­tics on newly-opened and re­cently-closed an­nounced in June 2019 re­vealed that a to­tal of 4,779 com­pa­nies op­er­at­ing in the con­struc­tion sec­tor, 207 of which are joint stock com­pa­nies, 959 pri­vate and 3,441 of sole pro­pri­etor­ship, were shut down, and in­crease of 21 per­cent com­pared to last year. The dra­matic de­crease in the num­ber of newly-opened com­pa­nies re­veals that peo­ple are re­frain­ing from es­tab­lish­ing new com­pa­nies in the sec­tor.

Stagfla­tion risk

The ac­cu­mu­lated re­serve fund and re­serve for con­tin­gen­cies bal­ance amounted to TRY 46.2 bil­lion as of the end of June 2019. With the en­act­ment of the law, around TRY 40 bil­lion of this amount is ex­pected to be trans­ferred to the Trea­sury. Although there are some ar­gu­ments that a mon­e­tary ex­pan­sion of TRY 40 bil­lion will not have an in­fla­tion­ary ef­fect, the re­al­ity is that such a move is against mon­e­tary tight­en­ing, which means print­ing un­backed money, will have an in­fla­tion­ary ef­fect by ex­pand­ing the money sup­ply with­out a loan. This move will mean the mon­e­ti­za­tion of Trea­sury debts. Such a move gives the im­pres­sion that a stagfla­tion threat is ahead.

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