Crisis cost 5 million jobs in Europe as Turkey boosted employment

MUSTAFA SÖNMEZ – Hürriyet Daily News,October/20/2014

The global crisis is behind us, almost six years on. Even though the epicenter was the United States, the European Union also caught fire immediately during the crisis. The U.S. is attempting to stand on its feet after the half-dozen years that have passed, but it is not easy to say the same thing yet for the EU.
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For the 28-member EU, various countries were affected to varying degrees. Some members were heavily wounded, such as Spain and Italy. Germany, on the other hand, which is considered the leader of the union, is in a relatively good situation, and one could even say it grew stronger during the crisis. The United Kingdom is trying to recover with difficulty. However, the big picture tells us that the EU is going through recession and the light at the end of the tunnel has yet to appear.
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Loss of jobs

The biggest pain of the crisis was felt by those who lost their jobs. The easiest way to measure the damage of the crisis from country to country is to review the employment losses of countries.

According to the European Statistics Office Eurostat’s data, the EU’s growth rate before the crisis, in 2007, was 3.2 percent. It was rolled back to 0.4 percent first in 2008 when the crisis erupted, but hit the bottom in 2009 when it experienced the biggest shrinkage in its history, dropping 4.5 percent.

Following this shrinkage, in 2010 and in 2011, some relative recoveries were experienced. However, in 2012 the union again experienced a negative growth rate of 0.2 percent. In 2013, a recovery of 0.1 percent was recorded from there. The expectations for 2014 were not pleasant either.

While six years have passed since the global crisis, economic troubles varied from one country to the other. Mediterranean countries, which had difficulty in harmonizing with the transfer to the joint currency, the euro, after 2000, were hit the most by the crisis. Greece experienced the heaviest blow while Spain, Portugal and Italy also received heavy blows. While Germany suffered minor scars because of its export capacity and its current account surplus, the U.K. was fiercely shaken by the crisis but is trying to recover rapidly.
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In Europe, the most direct impact of the crisis is on employment. Before the crisis reached its peak, in the last quarter of 2008, the total number of employed in the EU was 219 million. In the second quarter of 2014, however, this number dropped to 214 million, meaning that roughly 5 million people lost their jobs in the global crisis.

No doubt, some of the 28 members experienced major losses in employment; some, though, were able to increase their employment rates. The total losses in the losing countries amounted to 8.9 million, while the winners created around 3.9 million jobs, giving a balance of around 5 million fewer jobs.

The losers

Spain led those that lost the most. Its economy has shrunk four times in five years since 2009; while it had 20.5 million employed at the end of 2008, this figure dropped to 17.2 million at the second quarter of 2014; the loss is an unbelievable 3.2 million. In other words, 3.2 million people lost their jobs in Spain.

When the global crisis came, 4.5 million people were working in Greece. Almost 30 in 100 people lost their jobs in the crisis, and employment went down 1 million to 3.5 million.

In Italy where the crisis also hit heavily, the loss in total employment – which was 23 million – fell 1.2 million. Portugal, meanwhile, suffered 560,000 job losses during the crisis.

While Romania, the Netherlands and Bulgaria constitute the other major countries that experienced losses in employment, Iceland, southern Cyprus, Croatia, Estonia and Slovakia were countries that survived the crisis with small scars.

The winners

The 11 European countries which increased their employment rather than experiencing losses created 3.9 million jobs, ultimately giving employment to around 110 million.

Germany led this group while distinguishing itself markedly from other countries. This country, after going through a deep shrinkage in 2009 amounting to 5 percent, started hovering at growth rates of 4 and 3 percent in subsequent years. Its growth in the following years followed a horizontal course.
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In Germany, the number employed in the last quarter of 2008 was 37.5 million. This figure was 39.6 million in mid-2014. This means an increase of nearly 2.1 million in employment during the crisis years.

Following Germany, it was the U.K. that increased its employment with 734,000 jobs. Also Hungary, Switzerland, Belgium, Austria and Sweden were able to increase their employment rates.

And Turkey

In contrast with the countries in Europe which lost a net 5 million jobs during the global crisis years, EU candidate country Turkey presented a very different profile in terms of employment. During the period in question, Turkey increased its agricultural employment by 1.2 million and its non-agricultural employment by 3.4 million. Even though its non-agricultural employment decreased during the 2009 crisis, it rapidly increased in the subsequent two years. With annual growth of approximately 9 percent in 2010 and 2011, the number of non-agricultural employed neared 18 million.

Despite the growth rate of 2 percent in 2012 and 4 percent in 2013, it was interesting that the rapid increase of employment continued. As of mid-2014, total employment has reached 26.5 million. While almost 6 million of these jobs are in the agricultural sector, 20.5 million are non-agricultural.
jjNonetheless, Turkey’s seasonally adjusted unemployment rate in July 2014 was 10.4 percent; its non-agricultural unemployment rate is 12.5 percent, meaning its unemployment figure has exceeded 3 million.

Also, the quality of the employment that seems to have been created in Turkey should be taken into consideration. Even though numerous non-agricultural jobs seem to have been created, their low-paying and low-skilled nature are conspicuous. Labor-intensive industries such as textile and food, as well as construction, tourism and urban services are the main employment fields. An employment profile with low added-value and low productivity constitute the other side of the coin.

 

 

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Turkey ranks first in the inequality of income distribution

Mustafa Sönmez – Hürriyet Daily News October/13/2014

Economic growth during the Justice and Development Party (AKP) era was based on the inflow of foreign resources, concentrating on the domestic market. This has caused a quantitative increase in non-agricultural wage earners and also a growth in the inflow of salary/wage into households in the absolute sense.

However, the surplus created by this growth, at the same time, accelerated the seizure of the profit/interest rate/excessive income by the top segments of the pyramid. Moreover, there were significant increases compared to the previous period in the outflow of the surplus, which corresponded to the yearly $40 billion of foreign investments.

How, in this framework, was the share of this economic pie that grew about 5 percent annually? Has there been a recovery in the distribution in Turkey’s capitalism in this new climate? Has the inequality in the distribution of income lessened between the ones who are at the top of the population pyramid and the ones at the bottom?

TÜİK and income distribution

According to the income distribution surveys carried out yearly by the Turkish Statistical Institute (TÜİK), after the 2001 crisis the individual income distribution in Turkey moved to a more equal position.

As TÜİK’s income distribution data claims, in the years following the 2001 crisis, while the share from the total income of the first four groups of 20 percent starting from the very poor increased, the share of the richest 20 percent showed a constant decline. According to the same source, while the share of the first 20 percent who received the least share from total income was 5.3 percent in 2002, this figure went up to 6.6 percent in 2013. The share of the fifth group who received the biggest share from total income was 50 percent in 2002, while this went back to 45.2 percent in 2013. In parallel with this, the Gini coefficient, which shows the inequality in income distribution, was 0.44 in 2002 and went back to 0.38 in 2013.

What kind of a radical change was in question that decreased the incomes of the very top minority and increased the incomes of the families at the very bottom from the 1994 crisis to the 2001 crisis and from there to 2013? Several economists are asking this question and they express that it is a method issue in the income distribution survey repeated every year.

The method issue is this: In income distribution surveys, data is collected upon declaration. In other words, the selected households in the sample are visited and their incomes are asked and whatever they declare, that is accepted as correct. The “pie” that comes out is presented to the public as the distribution portrait and how it is distributed in 20 percent, 10 percent and 5 percent groups of the population.

Those who are criticizing this method are saying that collecting income data through declaration to estimate the pie is misleading unless it is cross tested with other data.

It is possible to see the unhealthiness of the data collected on the basis of declaration in the income distribution survey by comparing them with special consumption expenses.

The results of the TÜİK income distribution survey reveal that in 2013, there were 20,635,000 households in Turkey and the average of each household’s annual income was 29,000 Turkish Liras. In this case, the total pie that has been shared has a size of 608 billion liras. However, the same TÜİK’s 2013 national income data say that households have in the same year spent 1,109 billion liras. In other words, if only the amount of spending is taken into consideration, it can be seen that the pie that looks as if being shared is 54 percent bigger. This particularly shows us that there are shortcomings in especially determining the incomes of profit, interest rate and rent in the pie. As a matter of fact, data that only considers a pie that is only 56 percent of the spending is far from a reliable one. Moreover, it has been this way for years and TÜİK does not have any effort to add the non-recorded declarations into the analysis to fill in its deficiency.

International rankings

While TÜİK’s “Income Distribution Statistics” that it has been conducting every year since 2003 with the same method and the outcome of which it releases presents very questionable results scientifically; again, from 2003 onward, there is an effort to pull down the Gini coefficient. In this period that coincides with the AKP regime, the Gini coefficient has been decreased from 0.42 to 0.38, creating an impression that distribution has entered a recovery process in this era. The income distribution inequality in Turkey has been sent to institutions, such as the OECD, World Bank and the EU with these produced Gini coefficients.

Despite all these, even if the latest Gini coefficient announced by TÜİK is accepted as truth, again, Turkey cannot escape being the country with the worst income distribution in Europe.

According to the European Statistics Office Eurostat, Turkey, even with its 0.38 Gini coefficient, is 8 points higher than the EU average of 0.30 Gini coefficients. Even the country closest to Turkey, Spain is three points behind Turkey. While Mediterranean countries such as Italy, Spain, Greece and Portugal are nearing Turkey in inequality, it can be seen that in North European countries the distribution is relatively fair. In these countries where the social state tradition prevails, the Gini coefficient is below 0.30. Distribution in Europe’s biggest, Germany, though, is more equal compared to other big countries, such as France and the United Kingdom.

In the world

The Gini coefficient of Turkey, which is presented as 0.38, does not take Turkey off of the list of the world’s worst income inequality countries.
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The World Bank and OECD data reveals that South Africa is by far the champion of income inequality. Even though the white minority was ousted from political power in 1994, the white minority continues to be the richest segment in the country, while the gap between the South Africans, most of who live in shanty towns, does not narrow.

While the Gini coefficient expresses absolute inequality with 1, South Africa is the closest country to 1 with its 0.63 coefficient.

While Brazil takes the second place with its 0.55 Gini coefficient, the gap in other South American countries Chile and Mexico is also remarkable.

Turkey, with its “revised” 0.38 injustice coefficient for 2012 comes after China and Russia, which experience major inequalities in their transformation into capitalism. Malaysia and India in Asia and Spain in Europe are the closest countries to Turkey in inequality.

Accurate data  

In the light of all these facts, distribution continues to be an important issue for Turkey, but it is vague and behind a cloud about which direction in fact it is heading. Unfortunately, it is not easy to make a scientific evaluation because of the lack of production of accurate data. The findings of the survey carried out every year by TÜİK on income distribution contradicts with several realities; they are either insufficient or weak; and they fail to facilitate our comprehension of real distribution relations and their change from year to year.

The “Gross Domestic Product according to Income” issued by TÜİK every year was providing more accurate information on the distribution of the salary and non-salary surplus of the national income; however, as of 2006, this data production was ended without the need to make an explanation why.

The way to obtain accurate data on such topics as income distribution, which has political consequences as well as economic, is indeed through public institutions again. A healthier approach needs to be adopted in data gathering and methodology for an objective, scientific information production.

 

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Lira leads the way in emerging-currency devaluation

MUSTAFA SÖNMEZ – October 5, 2014, Hürriyet D.N.

The United States’ Federal Reserve (FED) will cut its bond-buying program as part of plans to end a program that served to support its country’s economy since the global crisis and will slowly increase interest rates.

Following this message from the FED, the capital outflow from “emerging countries” has caused significant losses in local currencies in the past 16 months.hh

The Turkish Lira leads in this process. The dollar which was 1.82 liras in May 2013 went up to 2.28 liras on Sept. 30, 2014. Thus the lira lost 26 percent against the dollar. In the period in question, the month that the lira lost the most was January 2014, and when the lira lost nearly 7.5 percent against the dollar, the Central Bank opted for shock increases in interest rates.

September 2014, on the other hand, has been the second month after January that the lira lost the most. A dollar, which started the first working day of September at 2.16 liras closed the month at 2.28 liras. This performance, which means a monthly loss of 6 percent, means Turkey lost the second most among emerging countries or developing countries in September.

According to the IMF database, the emerging country whose currency was devalued the most in September was Brazil. The Brazilian Real lost 9.6 percent of its value against the dollar in September.

Hot on the heels of Brazil and Turkey, which occupied the top slots in devaluation against the dollar in September, the South African Rand and the  Russian Ruble lost 5.6 percent and 5.5 percent over the month, respectively. The currency that lost the least among emerging countries in September was the Indian Rupee at 1.7 percent. The Czech, Polish and Hungarian currencies lost between 1.8 percent and 3.2 percent while it was quite remarkable that the Mexican Peso lost only 2.3 percent this September.

Most fragile in 16 months

The Turkish Lira, with its 4.6 percent loss of value in September, has devalued the most in terms of emerging countries since May 2013. Its devaluation in 16 months has reached 26 percent. A similar erosion has been observed in Russia’s national currency, as the country has been hurt by an embargo. pp

The 16-month devaluation of the ruble has reached 23.8 percent, with the erosion in the currencies of Indonesia and South Africa following it. The real’s erosion over the past 16 months was 19.5 percent. The least devaluation during that period was seen in European emerging countries. The devaluation in the Polish, Hungarian and Czech currencies in this 16-month period stayed in the corridor between 2.5 and 8.4 percent.

The adventure of the lira

While the lira was in the 1.80 TL/$ corridor in mid-2013, there was a nearly 4 percent loss in June, taking it up into the 1.90 lira corridor. The lira could not recover in the following months, even hitting 2.00 liras in August. Capital outflow occurred from the country, the political risk of which rose with the graft operation of Dec. 17 and Dec. 25, 2013, while new inflow also dropped. Therefore, at the end of 2013, the value of the lira against the dollar jumped into the 2.10 corridor. uu

With the political risk added to the economic risk, the dollar hit 2.20 liras on Jan. 16, 2014, and went up to 2.35 on Jan. 28, showing signs of a further upward trend. On that date, in a belated action according to several experts, the Central Bank intervened with interest rates and increased the weekly repo interest rate from 4.5 to 10 percent – in other words, with a shock increase of 5.5 points, intervening in the devaluation.

Following this severe intervention with interest rates and following the local elections on March 30, the political risk perception decreased, and the dollar went down to 2.07 in mid-May. However, there were presidential elections on the agenda and the hot clashes in the region were deepening. With the effect of the Islamic State of Iraq and the Levant’s (ISIL) attack in Iraq, Turkey’s geopolitical risk increased. With this perception, the price of the dollar in the following months went up from the 2.10 lira corridor to 2.20 liras, completing its climb to 2.28 liras by the end of September.

In the face of the devaluation of the lira, the Central Bank, despite all the pressure, did not reduce interest rates openly. However, it increased the number of dollars it sold to the market from 10 million to 40 million in the last week of September. It also restricted the liquidity amount it was supplying to the market to 8.25 percent and allowed the overnight rates to go up to 10.9 percent on Friday. In other words, it increased interest rates not in an official way, but via an indirect path.

Short-term loans

The dollar exchange rate is expected to more negatively affect firms that have short-term loans and banks. Even though the bank valued that short-term loans at the end of July at $130.2 billion, the total amount of loans to be returned within 12 months exceed $167 billion. Out of the short-term $167.1 billion loans stock, the portion of $23.4 billion belongs to the loans of local branches of banks, while those of private sector companies belong their overseas branches and subsidiaries.

The public sector has a share of 15 percent in the total loan stock, the bank 1.2 percent and the private sector 83.8 percent.

The biggest portion of the loans that are due within the next 12 months belong to private banks at $85 billion. However, public banks such as Ziraat and Halk also have almost $20 billion in short-term loans.

Firms, namely the real sector, have nearly $49 billion of loans squeezed into 12 months and a significant amount of them are import loans. Apart from public banks, the Treasury has liabilities associated with Eurobonds at nearly $8 billion, also within the next 12 months.

External debts constitute an important vulnerability. There is a concern that the dollar exchange rate which will probably jump to 2.30 liras threshold soon will result in serious fractures both in banking and in the real sector. In this case, the suggestion is that those firms that have major exchange rate expenses in their 2013 balances will become more fragile and start queueing up to be saved and that the bad debts of banks will increase.

 

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Stagnating house sales in Turkey prompt slowdown in construction

Mustafa Sönmez – Hürriyet Daily News /September 29, 2014

The slowing of the tempo in housing, the locomotive sector of the ruling Justice and Development Party (AKP) era, and generally in construction investments has become quite apparent. In the construction investments, with predominantly residential constructions, 35 percent of which are done by the government (central government and municipalities), two thirds of which was done by the private sector, the growth in the first half of 2014 remained behind the prior four quarters and fell to 3 percent.
In 2012, the annual growth stayed at 2.1 percent and the increase in construction investments remained below 1 percent; they speeded up in 2013 and investments increased nearly 9 percent. In all the four quarters of 2013 the tempo kept at a high level and the average investment increase reached 9 percent.

In 2014 though, this pace could not be maintained and the growth, which was nearly 6 percent in construction investments in the first quarter of the year, has gone down to 3.1 percent in the second quarter.

While the annual growth was 5 percent as an arithmetic average in the period between 2003 and 2013, the growth in construction reached an average of an annual 6.5 percent. Despite their share in total national income becoming 7 percent, construction investments have also directed the route of industry. Construction, which has activated several sub-branches of the manufacturing industry, from cement, to iron, to glass, ceramics, bricks and wood, has also changed this industry as to address the domestic market.

In these years, construction was also effective in also determining the course of finance. External bank loans were especially positioned as domestic consumer loans, with a share of nearly 25-30 percent. Mortgages hold the most important place among consumer loans. As of the end of September 2014, among the consumer loans stock, which had reached 270 billion Turkish Liras, loans for housing constitute 44 percent of it.

Also in employment…

The bottleneck in housing, and following it, the slowing down observed in the construction sector have also caused a decline in the number of people the sector employs. According to the data of the Turkish Statistical Institute (TÜİK) Household Work Force Survey, seasonally adjusted construction employment could not maintain its level of 2,018,000 people, reached   the first quarter of the year, and dropped to 1,854,000 people, with a decrease of 164,000 in the second quarter.

Why has it slowed down?

The slowdown in the pace in construction investments, which have become quite clear, is observed to come from predominantly housing investments, from the slowdown of the sale of housing units produced.

In mid-2013, the change in the global monetary climate that stemmed from the signals of the FED about its amendment of monetary policies diverted foreign investors to U.S. bonds. The exit of foreign capital from countries like Turkey increased and appetite for re-entries fell. When the political risk in Turkey was added to this, the exit of foreigners increased and the foreign exchange rate hiked in value by around 22 percent. This has caused an increase in costs in housing, as it did in all kinds of goods.

More importantly, an increase in interest rates was experienced. In order to curb the increasing foreign exchange rate, in January 2014, interest rates were raised radically by 5.5 points to 10.5 percent, causing a chilling effect on the economy. The interest rates of mortgages, which constitute almost half of consumer loans, were also affected by the new climate causing a deep effect in the housing sector. The demand for mortgages went down considerably; a sharp fall was experienced in mortgaged home sales. TÜİK’s housing sales statistics show that mortgaged home sales, in other words, sales of housing units bought with bank loans have fallen sharply. As a result of this, housing stocks have increased; thus followed by a decrease in housing investments.

According to the latest data, there was a 20 percent decrease in housing sales in July 2014, when compared to the same month one year before. In July, only 85,000 units were sold. The sale of mortgaged houses went back 33 percent, when compared to the same moth of the previous year.
The period between January 2014 and July 2014, in other words, the first seven-month period, gives a clearer picture. In this period, housing sales decreased 66,000 to drop to nearly 610,000 compared to the total of seven months from the same period the previous year. This corresponds to a decrease of 10 percent. But the real drop was experienced in the sales of mortgaged houses. In the first seven months of 2013, mortgaged houses, the ones bought with bank loans, were 291,000, whereas this figure fell to 197,000 in the first seven months of 2014. This means a decline of more than 32 percent and constitutes the main reason why construction investments have slowed.

The most important reason the sales of mortgaged homes declined is the increasing interest rates, as well as the increasing foreign exchange rates, which both negatively affect the costs of houses, causing the low course in the demand.

Because of the high inflation rate, interest rates will not decrease in the coming months, thus the demand for housing loans will not pick up, and it looks probable that the slowdown in the sector will also continue in the coming quarters.

 

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TÜİK’ten gelir uçurumuna yine makyaj…

BirGün’e verilen demeç; 23 Eylül, Salı

  • İktisatçı Mustafa Sönmez;  “TÜİK  sağlıksız gelir dağılımı araştırması ile 2013’te de bölüşümü iyileşmiş gösteriyor, 2006’dan bu yana bunu tekrarlıyor ve hem iç hem dış kamuoyunu yanıltıyor”…
  • Sönmez, paylaşılan gelir pastası, milli gelirde harcanmış görünenin ancak yüzde 54’ü, varlıklı sınıflar anket sırasında gelirlerini sakladıkları için, pasta da, paylaşım biçimi de adaletsizliği yansıtmıyor.
  • TÜİK’e bakılırsa, en varlıklı sınıfın gelirlerinin yüzde 52’si maaş ve ücretlerden, yüzde 15’i emekli gelirlerinden oluşuyor. İşveren gelirleri ise yüzde 15’ten ibaret

Kısa adı TÜİK olan Türkiye İstatistik Kurumu, 2013 Gelir ve Yaşam Koşulları isimli araştırmasını yayınladı. Araştırmada 2012’den 2013’e gelir dağılımının iyileştiği ve eşitsizliği gösteren Gini katsayısının 0,402’den 0,400’e düştüğü öne sürüldü. TÜİK’e göre,  maaş-ücret gelirleri yüzde 48,3’lük oranla toplam gelir içerisinde en fazla paya sahip olurken girişimci kârları yüzde 15 dolayında pay aldı. .

SÖNMEZ, ‘BİLİM DIŞI’

İktisatçı Mustafa Sönmez, TÜİK’in gelir dağılımı, yoksulluk  araştırması adı altında her yıl tekrarlayıp bulgularını duyurduğu bu çalışmanın yöntem olarak büyük eksikler içerdiğini, dolayısıyla iç ve dış kamuoyunu büyük ölçüde yanılttığını belirtti. Sönmez, BirGün’e yaptığı değerlendirmede şöyle konuştu; “ TÜİK, her yıl aynı yöntemle bu anketi uyguluyor ve her ne hikmetse toplumda gelir eşitsizliği hep iyileşiyor ve Türkiye, dünyadaki en utanç verici bölüşüm ilişkilerine sahip ülkeleri arasından bu sayede çıkarılmaya çalışılıyor.”

Sönmez, yöntemle ilgili eleştirilerini ve ortaya çıkanları şöyle ifade etti;

“Bu anket, hanelere gidip gelir beyanları alınarak yapılır. Alt ve orta gelirliler saklayacakları bir gelirleri olmadığı için doğruya yakın beyanlarda bulunurken varlıklıların ne kadar isabetli seçildiği ve beyanlarının ne kadar doğru olduğu su götürür.

Nitekim, anket, 2013’te Türkiye’de 20 milyon 635 bin aile olduğunu ve bunların uuortalama yıllık gelirlerinin 29 bin TL olduğunu ifade ediyor. Bu durumda paylaşılan toplam pasta, 608 milyar TL’lik bir pasta. Gelin görün ki, aynı TÜİK’in 2013 milli gelir verileri ailelerin aynı yıl 1 trilyon 109 milyar TL harcama yaptıklarını söylüyor. Yani sadece harcananları ciddiye alsak, paylaşılmış görünen pastadan yüzde 54 daha büyük. Bu da özellikle kâr,faiz,rant gelirlerinin , bölüşüme konu pasta tesbitinde eksik kaldığını bize gösteriyor. Gerçekte, harcananın ancak yüzde  56’sından ibaret pastayı nasıl ciddiye alacağız ? Üstelik bu yıllardır böyle ve eksiği gidermek için kaçak beyanları analize katacak bir çaba yok.”

ZENGİN OLAN, İŞÇİLER

Sönmez, bu yöntemsel çarpıklık nedeniyle ortaya komik manzaralar çıktığını da ifade etti ve şöyle örnekler verdi; “ TÜİK’i ciddiye alacaksak, memurlar ve işçilerin gelirleri, toplam pastanın yüzde 48’ini aşıyor, emekli maaşları pastanın 18’ini oluşturuyor. İşverenler,patronların kârları ise yüzde 13’ten ibaret, çiftçiler yüzde 6 pay alırken gayrimenkul ve borsa rantiyeleri de yüzde 6 paccya talim ediyorlar”

“Bir başka karikatürlere konu olacak TÜİK bulgusu da şu”  diyen Sönmez, şöyle devam etti. “TÜİK’in en varlıklı yüzde 20’lik kesim olarak tanımladıklarının gelirlerine göz attığınızda bunların yine yüzde 52’sinin maaş-ücret gelirleri, yüzde 15’inin emekli maaşları olduğunu görüyorsunuz. Patron kârları yüzde 17’nin altında kalıyor, rantiye gelirleri ise yüzde 8,5’tan ibaret. Yani TÜİK’e göre memleketin en zenginleri yine iyi ücret –maaş alan çalızzşanlar ve şanslı emekliler”…

Bu anketin ciddiye alınmaması ve daha sağlıklı yapılması için muhalefet partilerine görev düştüğünü belirten Sönmez, “Halkın vergileriyle böyle saçmalıkların her yıl tekrarlanması, yoksulluk verilerini de güvenilmez yapıyor ve sadece rejime propaganda işlevi görüyor ” dedi.

 

 

 

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As growth slows in Turkey, unemployment climbs

MUSTAFA SÖNMEZ – Hürriyet Daily News September/22/2014

 Turkey’s growth rate, which had been estimated by official and private institutions and organizations to be around 3 percent for the second quarter of 2014, has been announced at 2.1 percent – below expectations. This amounts to a notable slowdown in the growth tempo. As a natural consequence of this, seasonally adjusted unemployment has seen an upward alteration; unemployment is rapidly escalating. This trend is not unique to the second quarter either, as a series of indicators suggest that a similar course will be seen in the coming quarters.

The Turkish economy, which shrank after the 2009 global crisis, recorded “miraculous” growth rates at an average of 10 percent in 2010 and 2011. Then came low growth years. In 2012, the economy grew around 2 percent, while in 2013 it grew 4 percent. The target for 2014 is 4 percent, but growth in the first six months of the year was only 3.3 percent: 4.7 percent in the first quarter and 2.1 percent in the second quarter. Cabinet ministers have also accepted that the targeted 4 percent growth was too ambitious and a revision is necessary.

HDN

From exports…

The biggest contribution to the second quarter’s 2.1 percent growth rate came from the export of goods and capital. While the contribution from private and state consumption was a total of just 0.6 percentage points, the decline in investments also had a negative effect. The “Gross Capital Formation,” made up of the government and the private sector’s investments, dropped 3.5 percent, contributing the most important negative effect on growth. Especially the private sector’s investments have come to a halt.

The biggest contribution to the second quarter’s 2.1 percent growth rate came from the increase in the added value of exports of net goods and services. The added value created in exports of tourism, international construction and international transportation was the main competent of growth, with a 2.8-point contribution.

Domestic demand

A significant factor in the drop of the growth rate was the shrinkage in domestic sales and investments. High interest rates and the hike in foreign exchange rates had an effect in this result. With the decline in demand for housing, white goods and automobiles, the growth in the domestic market also shrank.

External sales, on the other hand, both due to the recession that Europe is still experiencing and also the increasing geopolitical risks and war in the Middle East, could not open a field of growth. This whole situation has considerably slowed down production wheels.

When viewed according to sectors, it can be seen that agriculture declined nearly 2 percent – a result of draught and other climatic circumstances. While 7 percent growth was recorded in mining, growth in the manufacturing sector stayed at 2 percent. As a result of the fall in domestic sales, growth in trade was limited to 0.3 percent. In the “star” sector of the period, the construction sector, average growth was exceeded by just half a percentage point, becoming 2.6 percent.

It doesn’t seem possible that Turkey’s unsuccessful growth performance will shift to a positive tempo in the third and fourth quarters of this year. Interest rates, which cannot be lowered due to inflation rates approaching two digits, are pressuring both investments and domestic demand, and it looks like growth will remain below 3 percent on an annual basis in the coming quarters.

HDN Climb in unemployment  

The low growth of the second quarter has been reflected in the increase in unemployment. The rate of unemployment for June (seasonally adjusted) has been released by the Turkish Statistical Institute (TÜİK) as 9.9 percent. Non-agricultural unemployment in June, however, has reached 12 percent; youth unemployment is 18.1 percent.

When viewed from the annual basis, general unemployment has increased by 1 point in 12 months, from 8.9 percent in June 2013 to 9.9 percent in June 2014.

On an annual basis, the number of unemployed has gone from 2,412,000 to 2,854,000, an increase of 442,000. It is noteworthy that a little over a quarter of this increase occurred only in the month of June.
When non-agriculture unemployment is viewed, the 10.8 percent rate of June last year increased by 1.2 points this June, to reach 12 percent. In the May-June period of this year it increased by half a point.

Unemployment among those aged under 24 has increased 1.4 points in 12 months, from 16.7 percent to 18.1 percent.

These are alarming dimensions.

Decrease in employment

In June of this year, 20,000 people joined the workforce but were unable to find jobs, while some 96,000 people who had jobs have also lost their jobs. The June employment data (seasonally adjusted) show that there has been an employment drop of 72,000 in agriculture and 32,000 in industry. In June, the employment drop in the construction sector was 54,000, meaning that the number of workers in the sector dropped to 1,800,000.

Despite the drop in agriculture, industry and construction, employment in June in the services sector increased by 62,000. But, at the end of the day, the net employment loss was nevertheless 96,000. With the addition of the 20,000 who joined the workforce in June but were unable to find jobs, some 116,000 people were added to the army of the unemployed; thus increasing unemployment to 9.9 percent.

Investments halted

What was effective in the rise of unemployment was the 3.5 percent drop in investments in the second quarter, the fall in production capacities, and the draught experienced in agriculture.

Growth data in the second quarter showed that there has been a decline in investments of up to 7 percent, particularly in machinery-equipment investments, while there was a 3 percent increase in construction investments. The fall in domestic demand, primarily in the construction, automobile and white goods sectors, has forced businesses to stock and, if the stocks are full, to lower capacity and trim employment.

It is highly probably that the problem of low growth, generating unemployment, will also be experienced in the coming quarters. It looks inevitable that official unemployment will be announced as being in two digits as of July, and that the year will close with at least 11 percent general unemployment and 13 percent non-agricultural unemployment.

 

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Netleşemeyen Kürt Siyaseti ve Özerklik…

Geçtiğimiz hafta Kürt siyasetinin çeşitli kurum ve kuruluşlarınca Diyarbakır’da (Amed) yapılan çalıştaydan medyaya yansıyan bazı demeç ve mesajlar bir kez daha Kürt siyasetinde “netleşememe” sorununu gündeme çıkardı.

AKP’nin neoliberal-faşizan ikliminde hem de bu bütünün içinde kalarak “komünal ekonomiler” inşa etmekten,  “siyasi özerkliğin yanında  mali özerklik”  talep etmeye varan bir dizi kakafonik talepler, söylemler duyduk yine…

Kürt özgürlük hareketi, Türkiye’nin demokrasi ve sosyalizm mücadelesinin önemli bir bileşenidir. Hareketin, strateji ve mücadele hedefleri konusunda net olması, önermelerini doğru sorgulayıp enerjisini doğru kullanması konularında uyarılarda bulunmak bir sorumluluktan öte görevdir.Kürt hevallerimizin de bugüne kadar yaptıkları gibi, eleştirilerimizi sağduyu ve soğukkanlılıkla değerlendirmelerini bekleriz.

DEVLET Mİ?

Kürt siyasetinin sürekli bir kafa karışıklığı içinde görüntü vermesinin temel nedeni,  iki farklı stratejinin hedef ve araçlarını birbirinin içine geçirmelerinden kaynaklanmaktadır. Amaca ulaşmak için seçilen araçların, amaçla uyumlu olması gerekir. Alet çantasındaki aletlerle neyi düzeltmeye çalıştığınız önemlidir. İngiliz anahtarıyla televizyon onaramazsınız.

Kürt siyasetinde eğer strateji, Kürtlerin Türkiye’den koparak ayrı bir devlet kurmalarıysa, bunun hedefle beraber araçları da farklı olacaktır . Bu, Kürt ulusunun kendi kaderini belirleme hakkıdır. Eğer böyle bir stratejik hedefiniz varsa, ona göre Kürdistan sınırlarınız da bellidir, ayrıldıktan sonra nasıl bir üretim ve siyasi ilişkiler kuracağınız da. Kürdistan’da, resmi dili Kürtçe olan, yönetim organları seçimlerle işbaşına gelen, halkın yönettiği, üstelik anti-kapitalist, komünal bir üretim biçimine dayanan bir sistem kurmak istiyoruz, dersiniz ve bu hedefinize uygun yeni bir toplumsal sistem tahayyül edip uygulamaya geçirirsiniz. Bu birinci seçimdir ve amacıyla araçları tutarlı olmalıdır.

İKİNCİ SEÇİM

İkinci seçim, Türkiye bütünlüğü içinde Kürt kimliğini özgürce yaşayarak Türkiye’nin demokratikleşmesine katkıda bulunmak stratejisidir. Bu seçeneğin de stratejik hedefleri ve araçları farklıdır. İkili bir hedef söz konusudur burada. Birincisi, Kürt kimliğini Türkiye bütünlüğü içinde özgürce yaşamak, ana dil önündeki engellerin kaldırılması, Kürt tarihi ve kültürünün ihyası gibi hedefler programın önemli bir alt başlığıdır.

Bu seçimin diğer alt başlığı ise Kürt olmayan diğer demokrat-devrimci unsurlarla Türkiye’nin bütünü için geçerli bir demokratikleşme mücadelesi sürdürmektir. Kürt olmayan kimliklerle tüm kültürler, renkler ve kimliklerin özgürce bir arada yaşaması için birlikte mücadele etme ve daha özgür, daha paylaşımcı, daha demokratik bir Türkiye’nin inşası için emek sınıflarına dayalı bir örgütlenmeyle birlikte mücadele etmektir. Tüm ülkeye şamil  demokratik özerk bölgeler türü bir idari reform da bu seçimin bir ögesidir, bu bölgelerin mali yönden yetkilerle donatılmaları vs…de…

PRATİK NE?

Yukarıda kabaca tanımlanan iki makro hedef ve farklı araçları kullanma, Türkiye pratiğinde tam bir kafa karışıklığı, algı keşmekeşi içinde yaşanagelmektedir.

Bilindiği gibi PKK hareketi, kurucusu Abdullah Öcalan tarafından 1990’ların sonlarına kadar “ayrılma”, bağımsız bir Kürt devleti kurma stratejisine sahipti ve bunu silahlı mücadeleyi esas alan bir siyasi hatta götürüyordu. Bugün Kürt siyasetinin “resmi tarih”inin de kabul ettiği gibi, 1990’ların sonlarında bu stratejiden vazgeçildi. Bağımsız devlet kurma fikrinin dünya ve yurt gerçekleriyle uyuşmadığı saptamasından hareketle, Türkiye bütünlüğü içinde Kürtlerin özgürleşmesini sağlamak esaslı bir stratejiye yönelindi. Bu radikal bir kopuştu.

Dolayısıyla birinci –ayrılma- stratejinin hedef, mücadele araçları ve öngördügü hayat modelinden vazgeçip ikincisine ait hedeflere, mücadele yöntemlerine ve pratiğin gerçekleştirilmesine yönelme tercihidir artık söz konusu olan.

BÜTÜN VE PARÇA…

Burada da parçası olmayı kabul ettiğiniz bütünü iyi anlamak ve kendinizle beraber bütünü dönüştürmek için kimlerle, ne için mücadele etmeniz gerektiğini yeniden tanımlamak gerekir. Parçası olmayı kabul ettiğiniz bütünün Anayasa’sını dönüştürmeyi hedeflemeden, parça olarak kendinize Anayasa (statü) yazamazsınız. Bütünün üretim ilişkilerini eleştiren, dönüştürücü bir vizyon geliştirmeden, kendi parçanızda yeni (anti-kapitalist) üretim modellerini asli üretim biçimleri durumuna getiremezsiniz.

Kürt nüfusun yarı yarıya ülkenin Doğu’sunda ve Batısında ikamet ettiği bir gerçeklik karşısında belli illerin toplandığı coğrafyayı Kürdistan diye nitelemek, ancak bir kimliğe saygının gereği tarihsel-kültürel bir gerekçeye dayanabilir, ama bunu aşarak bir gerçeklik için bu tanımı siyasi motifle kullanır ve demografisi altüst olmuş bir iller topluluğu için “Kürdistan’a özerklik” talebiyi ortaya çıkarsanız, yine amaç-araç tutarsızlığına , keşmekeşine düşersiniz.

DEMOKRATİK ÖZERKLİK..

Birkaç kez yazarak ve konuşarak ifade ettim, tekrarlayayım; Demokratik özerklik, “etnik” kıstasla örülecek bir proje değildir. 81 Türkiye ilini 20-25 kümede toplayarak bölgeleştirme ve onları daha çok yerele tanınmış yetki ve kaynakla yönetilen idari birimler olarak reforme etme doğru bir taleptir ve tüm Türkiye’ye gereklidir, demokratikleşme açısından, kimliklerle ilgili sorunları yerelde çözme açısından, dengeli gelişme ve anti-otoriterlik, katılımı çoğaltma vb açılarından…Ama o bölge tanımlarını “etnik” temelde yapmaya kalkmak, yine amaç ile aracın uyuşmazlığını ve onun anomalilerini üretecektir.

Kürt kimliğinin özgürce yaşanması, ana dilde eğitim ve kültürü geliştirme, hakikatleri soruşturma ve hesap sorma, Öcalan’ı da kapsayan bir siyasi af…Bütün bu taleplerin “bölgesel özerklik, mali özerklik” vb. ile  mekan, coğrafya  ile ilgili olmadığı, ülkenin İstanbul’undan Hakkari’sine, tüm illerinde yaşayan tüm Kürtlere ait talepler olduğu açıktır. Bu mücadeleyi asli olarak elbette Kürtler yürütecektir ama bu haklı taleplere omuz vermek en az Kürtler kadar onlarla dayanışan tüm demokratların, sosyalistlerin görevi gereğidir.

Özetle, “coğrafya”, faktörü,  demokratik özerklik esaslı talepler, Kürt özgürlük mücadelesini tanımlayan asli elemanlar olmaktan çok, tüm Türkiye halklarının, demokrasi mücadelesi sürdürenlerin, hatta CHP’lilerin bile programında yer alması beklenen taleplerdir. Çünkü sonuçta yerelden yönetmek, bir üretim biçimi-ilişkisini altüst etmek değildir, örneği kapitalist Avrupa ülkelerinde görüldüğü üzere, burjuva demokratik hak ve özgürlüklere sahip olmanın, genişletmenin  araçlardır son tahlilde  ve İstanbul’a da gereklidir, İzmir’e de, Antalya’ya, Trabzon’a da…

Amaçları ve ona ulaşmak için gerekli araçları netleştirmeden atılmış adımlarla  uğranılmış kayıpları  en azda tutmanın yolu, sabırlı, bilime dayalı bir sorgulamayı , muhasebeyi gerekli kılıyor.

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Turkey’s trade shrinks with war-torn neighbors Iraq and Syria

Mustafa Sönmez – September/15/2014

Turkey’s foreign trade with its two southern neighbors, both engulfed in violent conflicts, does not look good. There is a decline in the Iraqi market, which is Turkey’s second most important market with an annual trade volume of $9 billion. In Syria, on the other hand, where there was much hope in 2010, war has inflicted a heavy blow on commerce.

The Iraqi market is very important for Turkey, and its shrinkage causes major concerns. Exports to Iraq in the first seven months of the year were $6.4 billion, a 2 percent decrease from those of the first seven months of 2013. It is a bitter probability that this shrinkage will continue until the end of the year.

We have seen the war against the Islamic State of Iraq and the Levant (ISIL) gangs create a major recession and a decline in demand in Iraq’s economy, both in the north and south. There is a high probability that even larger sale and transportation problems will be experienced in the coming months, particularly in exports from Turkey to Iraqi Kurdistan.

Turkey’s exports to Iraq, especially to the Kurdish region, have risen significantly in recent years. Exports, which reached $5 billion in 2009, accelerated in subsequent years to hit $12 billion in 2013. This marked an average increase of 24 percent, but exports started to decline in 2014. In the first seven months of 2013, it was nearly $6.6 billion, going down to $6.4 billion in 2014, a decrease of 2 percent.

The products that have seen a decline in exports are those used mostly in construction and other investments. While iron and steel exports declined nearly 30 percent to $624 million in the first seven months of this year, there have also been significant decreases in exports of products such as cement, ceramics, glass, machinery, equipment and other inputs.

Various industry products have a share of 27 percent in exports to Iraq. While live animals and food products make up 24 percent of total exports, the share of machinery and transportation vehicles makes up 15 percent.

Tanks, armored vehicles

The details of exports to Iraq reveal more interesting facts. Exports of tanks and armored vehicles reached $441 million in the first seven months of last year. This year, this figure was $447 million. It is not known whether these sales are to the Kurdish region or to the central government.

Grains, especially flour, lead in Turkey’s exports to Iraq, holding an important place in the total exports of southern provinces, primarily Gaziantep. Other important exports include vegetable oil, fruits and vegetables, poultry and sugary products.

Several products are exported to the Iraqi market, from clothing to home textiles, not only from southeastern provinces but also from everywhere in Turkey. The unrest in the country has negatively affected all exporting sectors.

Is this a recovery?

Turkey’s foreign trade with Syria was full of hope before the war, with discussions of the annual bilateral trade volume with Syria reaching $5 billion. However, reality confounded expectations. The bilateral trade volume, which exceeded $2.3 billion in 2010, plummeted with the civil war. Turkey managed to continue exporting to Syria, if only at a snail’s pace, but buying from Syria plummeted.

According to the Turkish Statistical Institute’s (TÜİK) foreign trade data, exports to Syria stood at around $1 billion in the first seven months of this year. Hopes have been renewed because the exports of seven months surpassed the seven-month exports of the past two years. In the first seven months of 2012, when relations with Syria were exceptionally strained, exports had declined to $333 million. Exports remained at $498 million at the end of 2012.

Despite the relative recovery experienced in 2014, imports from Syria still lag quite behind their previous level. While $294 million of imports were received from Syria in the first seven months of 2010, imports from the first seven months of this year remained at $52 million.

Trade with Syria had reached its peak in 2010, with over $1.8 billion in exports and $453 million in imports: A total trade volume of $2.3 billion. With the war, however, bilateral trade hit bottom, and in 2012 it plunged to as low as $550 million.

Trade with Syria recovered slowly in 2013. In 2014, however, there are hopes that it could reach its pre-war level.  

Syrians and unregistered trade

It looks as if the efforts of Syrian businessmen have been effective in increasing trade with Syria to its former level, with Syrians revitalizing trade through companies they have set up in Turkey.

According to data from the Turkish Union of Chambers and Commodity Exchanges (TOBB), companies formed by Syrians operate in several different lines of work.

A number of Syrians have set up business along the Syrian border, especially in Gaziantep, Kilis and Mersin, conducting trade between the two countries. These Syrians are exporting goods from Turkey that are urgently needed in Syria, such as wheat, flour, potatoes, onions, pasta, gas bottles and baby diapers. They also import products that are cheaper in Syria to Turkey, although this is quite a limited trade.

Meanwhile, nobody denies the existence of unregistered trade with Syria, of significant size. It is often discussed that various firearms and chemical substances are sold from Turkey while smuggled diesel enters from the other side, but the volume and the players in this trade remain vague.

 

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Low foreign trade, low growth

MUSTAFA SÖNMEZ – Hürriyet Daily News -September /08/ 2014

Foreign trade indicators from the first seven months show us that the 2014 growth target of 4 percent will be difficult to achieve.

The Turkish economy was integrated rapidly with the world economy after 2000 through both exports and imports (particularly imports). The most sensitive indicator of Turkish economy related to growth is foreign trade, analyses show. When foreign trade speeds up, economic growth also speeds; its slowdown points to a shrinkage in the economy.

Integration increasing 

Turkey had a total foreign trade of $83 billion at the beginning of 2000; this commerce constituted 31 percent of the national income. The rapid loss of value of the Turkish Lira (major devaluation) experienced in 2001 worked well for exports. As a result, in the 2001 crisis and following years, foreign trade increased a little and its size reached 37-38 percent of national income.

Integration accelerated in following years. Foreign trade accelerated as well as economic growth in connection with it.

The import leg of foreign trade particularly grew faster than export. The fact that a series of reforms were done after the 2001 crisis built confidence in foreign investors, also the political attraction of the Justice and Development Party’s (AKP) one-party government, sped up the inflow of foreign capital. This, in turn, accelerated imports and, to a certain extent, exports.

When the foreign capital inflow prompting more money to be spent on imports stimulated production focusing on the domestic market, particularly construction, economic growth sped up.

As a result, increased imports and increased exports, even though the latter lagged behind, increased trade with the outer world and its share in national income reached 45 percent in 2008.

HDN During the crisis

For Turkey, 2009 was a year that the global crisis did not knock down but shook and when there were rapid climbs in the outflow of foreign capital and foreign exchange rates, imports decreased to a significant extent. The gaining of value of foreign currency did not help exports either. The drop of demand in world markets did not activate exports. As a result, in 2009, total foreign trade shrank 27 percent compared to 2008. In national income, the drop in dollar basis reached 17 percent.

In the years after the crisis, both foreign trade and, based on that, the growth rate rose. In 2010 and 2011, foreign trade increased around 25 percent accompanied by a growth in national income based on dollars first to 19 percent, then nearing about 6 percent.

However, the increase of imports in 2010 and 2011 beyond that of exports ultimately boosted the foreign trade deficit. This meant the foreign currency deficit rose and the growth in the current account deficit rose to gigantic dimensions. The years 2012 and 2013 have become low-tempo growth years even though the appetite for imports did not really fall.

HDN 2014 foreign trade in 2014

Will the growth target for 2014 set at 4 percent be reached? This frequently asked question was answered positively in the first quarter, that is the period between January and March, but the following quarters have not given much hope on the matter because there is both a significant drop in the domestic demand while difficulties are also being experienced in the international situation.

Despite the foreign exchange rate having a course that encourages exports, the increase in exports is not to the extent expected. While the export of the first seven months has reached $93 million, it has shown a mere 6 percent increase compared to the first seven months of last year. In fact, when the foreign exchange rate increased 20 percent in dollars and almost 25 percent in euros, then it was expected than this would become a wind for exports, but it didn’t happen.

The factors behind the fact that the increase in exports was a mere 6 percent in the first seven months of the year were both the absence of appetite in the EU market and the geopolitical risks and wars in the Middle East. Sales to Iraq, the second-largest market for Turkey’s exports, fell back to 2 percent in the first seven months. Despite the loss of appetite in the EU, nearly 44 percent of our exports were done to the EU in the first seven months. It was 41 percent in the first seven months of last year; thus an increase of 3 percent had occurred. On the other hand, a real fall was experienced in the Near and Middle East, the geography of hot war. While the share in exports was 24 percent, it went down to 22 percent, with a loss of 2 points.

HDN

The course of imports

The effect of the sharp hike in foreign exchange rate on imports is on the negative direction. The sharpest drop in exports occurred in July and the fall was 13.5 percent compared to July last year.

In the first seven months, imports decreased from $149 billion to almost $140 billion, with a drop of $9 billion. This decline in imports stems mainly from the fall in the import of capital goods, imported vehicles and bar gold.

The foreign trade data of the first seven months carry signs pointing out that the growth target of 2014 set at 4 percent will be difficult to achieve. The fall of the tempo in exports and the low course of imports especially in July point out that growth wheels have slowed down also in the third quarter, following the second quarter.

It can be seen that especially the exports which played a pioneering role in last year’s 4 percent growth will not be quite as successful and that growth rate may decrease even below 3 percent.

The foreign trade data of the first seven months also show that the current account deficit may be around $50 billion. Even at the current state, when an increase in national income that navigates below 4 percent is considered, then a current account deficit/gross domestic product rate of around 6.5 or 7 percent is possible. This is another significant indicator of vulnerability.

 

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Domestic sales contracting amid Central Bank’s interest moves

Mustafa Sönmez – Hürriyet Daily News, September 1 ,2014

There has been an apparent stagnation in the markets and even a recession in sales, and recent economic statistics confirm this recession. According to these statistics, housing sales in July failed to reach expected levels; construction continues, but fails to attract new buyers. Even the sales of white goods are low compared to last year’s. The current economic situation forces the Central Bank to lower the interest rates.

The interest rates cannot be radically lowered in an economic environment where inflation is above target levels, however. The credit rating agencies indicate that when inflation is considered, the reduction of interest rates will lower Turkey’s credit mark.

At the beginning of this year, when foreign currency rates were rapidly rising, the interest rate was increased by 5.5 points and froze the markets. It was impossible to lower interest rates considerably due to rising foreign currency rates, as they were threatening; rising product costs also did not allow for the reduction of interest rates.  Last week, for example, an expected base reduction of 25 points did not materialize, and the weekly repo interest rate remained at 8.25 percent. This is due to the annual inflation rate, which is a point above the repo interest rate.

Constructors, estate owners and various retail shop owners are complaining about decreasing sales, and they were the ones warning then-Prime Minister Erdoğan  that this would negatively affect voters’ actions. The outgoing prime minister menacingly demanded that the chief executive of the Central Bank reduce interest rates almost every month. The chief executive did not resist these demands, but he also did not radically reduce interest rates. Despite the serious tendency to raise inflation rates, he acted realistically and did not change the rates.

A statement made after this decision indicates that food inflation, drought and geopolitical risks influenced the decision not to reduce interest rates. This resulted in a steady decrease in interest rates of 1.75 points since January. But this is not a feasible solution for shrinking markets.

Real Estate

Real estate is the most important sector that is suffocating in the domestic market. Monthly statistics, especially those about mortgage sales, point to a receding demand for real estate. In July, there was a 20 percent decrease in demand compared to that of last year: There were 85,000 real estate sales, and mortgage sales also decreased by 33 percent compared to the previous July. In the first seven months of the year, real estate sales dropped to 610,000 – 66,000 less than real estate sales in the first seven months of 2013. The most serious reduction, however, is in mortgage sales, which fell from 291,000 to 197,000 in the first seven months of 2014, a decrease of over 48 percent.

Automotive

Alongside real estate, there is also a serious decrease of demand in houseware, cars and consumer products. The rise of the value of foreign currency since May of last year — an annual increase of the dollar’s value by 20 percent and the Euro’s by 25 percent – reduced the demand for both foreign and domestic products. The rising value of foreign currency also negatively affected domestic sales by triggering efforts to stop the Turkish Lira’s devaluation through raising interest rates. A reduced use of credit cards and consumer credit due to increased interest rates reduced domestic demands. Many people also canceled or postponed their purchases of products due to rising political risk.

The automotive sector sales face a major recession in domestic markets. The sales, which surpassed 58,000 in June 2013, fell to 47,000 in same month of this year, marking an annual decline of 11,000 units and 19 percent. If we consider the first six months of the year, the situation seems more serious. Automotive sales, which were 296,000 in the first six months of 2013, fell by 30 percent to 226,000 in the same period of this year. The rising value of foreign currency affected decreasing demand in this sector.

Houseware

Sales of houseware and appliances, comprising of refrigerators, washing machines, ovens and dish washers, declined by 7 percent in the first seven months of 2014. Domestic sales of fridges plunged by 12 percent during the same period and sales of laundry machines dropped 6 percent. The sector is only held up on its feet by exports, as the sale of washing machines, which also dropped by 45,000 units in the period between January and July. The sales performance in ovens is the only exception in this group. The units sold increased by 7 percent over this period.

Interest rate reduction?

With the decrease in domestic demand – particularly in the housing, houseware and automotive sectors – and with the complaints from several sectors, the pressure on the Central Bank for interest rate reduction will remain effective. It is right to say pressure for perceivable reductions will be ramped up on the new government as the country heads to the parliamentary elections in 2015.

Although the annual inflation rate of over 9 percent does not allow a valid reason such a reduction, eyes will remain on the Central Bank’s decisions almost every month.

September/01/2014

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