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On top of structural problems of its economy and wrong political maneuvers, uncertainty with Turkey’s growth rate has pulled the rate of dollar against Turkish Lira up to 3.47. This means that the value of lira against dollar has melted down by 18% within the past year.
While these rates also lower the purchasing power of the people in a fast pace, debts in real economy have multiplied and operations in factories have slowed down. Turkey’s chronic problem with unemployment has again begun to rise up. On the other hand, the government of Turkey is trying to convey a message to the people of Turkey by hiding the problems and asserting ‘our economy is sound.’ So, is Turkey’s economy really standing strong as the government claims it to be so?
Value of salaries has melted
While the minimum wage of 1300 TL could be converted to 445 USD (with an exchange rate of 2.91) at the beginning of 2016, it now equals to 374 USD, 71 USD less than about 10 months ago.
Gas tanks are on fire
For those with cars, it is now much more difficult to fill up their gas tanks. In the beginning of 2016, a tank of 56 liters used to be filled up for 239 TL; however, Turkey’s citizens now need 276 TL to fill up that tank, as gas is 4.92 TL per liter.
Debts are multiplied
The increase experienced in exchange rate has also led the private sector of Turkey – which have 100 billion forex assets against 311 billion worth of liabilities – to be burdened with multiplied debts. The 211 billion dollars worth of total debt of the sector equaled to 622 billion TL in August; that debt has now increased to 732 billion TL.
Unemployment is actually %20
Unemployment, which was reported by Turkey’s state institutions as 9.3% earlier in April this year, began to increase lately. According to the latest data released in August, unemployment stood at 11.3%. Experts underline that this rate go up much further until February of 2017. On the other hand, Union of Progressive Workers stated that the actual rate of unemployment is as high as 20% as of now.
Growth rate is on the fall
Turkey’s economic growth rate began to slow down during the second quarter of the year and fell under 4.8%, which was the rate at the beginning of the first quarter. Despite all the magnified domestic demand and increased state expenses, growth rate stood at 3.1% by the end of the second quarter.
According to a latest report of BETAM (Bahçeşehir University Center for Economic and Social Research), while the expected increase in the growth rate for the month of November 2016 is only 0.1%, annual growth rate will remain at 2.6%.
There are also speculations Turkey might actually experience a negative growth by the end of the third quarter.
Signs of crisis in industry
Latest data released signal a crisis in industries. According to the data of Turkish Statistical Institute, industrial production in September went down by 3.8% in comparison to the month of August.
On the other hand, report of the Union of Chambers of Turkish Engineers and Architects on ‘Problems of Turkey’s Industry and Analysis’ indicates that a low paced industrial production, investments, and employment will continue in 2017, as well. As factories refrain from making investments, 67% of the profits go to interest rates.
Tourism is as we know
One of the sectors that paid the highest price of wrong foreign policies in Turkey is the tourism sector and it has not been able to shake off from it. According to latest data, number of foreign visitors in Turkey during the month of September this year fell down by 32.84% compared to the same month last year.
Domestic markets are stagnated
Stating that the most recent data demonstrates how the country’s economy is almost shredded to its pieces, faculty member of Gazi University’s Economics Department Prof. Aziz Konukman pointed out that domestic markets are in a major stagnation.
Talking to BirGün, Prof. Konukman explained: “There is a 27.3% lessening in taxes collected for sold items. This is an indication of a major regression in domestic markets… The latest increase in ÖTV (special consumption taxes) has been applied mainly on very luxurious cars. However, these kinds of cars are generally purchased by firms. Firms would buy the cars and pay the ÖTV and KDV (VAT). But since they have the option to deduct it under corporate tax, Turkey’s State would end up receiving taxes from one end but giving it back from another.
A crisis greater than that of 2001 might be on the way for Turkey
Also commenting on the severity of the point reached in Turkey’s economy, Prof. Hurşit Güneş said the government is still ‘incapable of comprehending the extent of this peril’.
Güneş also explained that while the crisis of 2001 had emerged due to debts of the state and its adjustment and refinancing was therefore easier, the current debt belongs to the private sector, making it seriously difficult and complicated to have control on.
Drawing attention to the impact of coup attempt and state of emergency, Güneş also said with clashes both within and outside, as well as the restrictions on democratic practices and freedoms, Turkey stands as a risk for foreign investors. Güneş also pointed out the impact of the situation with Europe, adding ‘Turkey is likely to lose its attraction as a good investment point’.
Front-page article of BirGün on 28 November 2016, Monday
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