15 March 2019 18:21

The sharpest storm of the last 10 years: Turkish Economy has shrunk 3%

Turkish Statistical Association (TÜİK) explained the growth numbers. Turkish economy shrunk 3% in the last quarter of the year.

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Turkish Statistical Association (TÜİK) explained the growth numbers.

The result was as expected, the Turkish economy shrunk 3% in the last quarter of the year.

There is no good news - not just for the last quarter but for the whole 2018.

This is the slowest growth experienced in Turkey since 2009 when it shrunk 4.7%.

The declared per capita income for 2018 is $9,632.

This amount was 10.546 $ last year, showing that there has been a fall of $914 in a year.

The per capita income has regressed to the level of 2007.

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2018 was a year of going downhill.  This fact is revealed by the growth data of all the four quarters:

7.4% growth in the first quarter,

5.5% growth in the second quarter,

1.6% in the third quarter,

and 3% contraction in the last quarter.

This fall from an an environment where inflation is around 20% and 7% growth, to a 3% contraction is a serious indication of a crisis.

In spite of this fact it is said “Although the Turkish economy has shrunk in the last quarter, it grew 2.6 %  in 2018. The size of economy reached 3 trillion 700 billion 989 million TL in 2018”.

DID YOU SAY GROWTH?

National income in 2018: $784 billion  

National income in 2017: $851 billion  

$67 million has evaporated! This reduction also disrupted the international position of the Turkish economy.

In 2017 Turkey was the 17th biggest economy, but has since lost her seat to the Netherlands and regressed to 18th place.

On the other hand, the Treasury Secretary Berat Albayrak normalised the shrinking of the economy in the last month, saying “It was as expected”.

So the Treasury Secretary who claimed to be balancing the economy, now claims to have been expecting the crisis.

However, the 2018 growth target was 3.8 % on the revised three year plan in September.

But the outcome is 2.6%.

The difference between the expected and actual figures are as big as the growth rate of German economy.

There was a growth in 2018 because of the high growth rate in the first quarter.

This growth was a result of the incentivising of domestic demand.

Let us ask: Is there anyone else with an improving economy?

And let us give a picture of poverty: the Dollar has risen from 3.5 to 5.5 TL.

Nobody experienced an income growth to balance against this rise except from a very few who were dollar rich.

Nobodies kitchen was richer or better stocked last year.

On the contary, the retail data shows people’s food expenditure falling.

The education budget is under pressure, and people are opting out of visiting the theatres and cinemas.

The ability of people to repay debt has fallen.

Incidents of banktrupcy have increased.

Number of the people who have lost their insured jobs in the last three months is 580 thousand. Unemployment has risen.

THE TRAJECTORY IS NOT GOOD!

Treasury secretary Berat Albayrak says “The worst is behind us in terms of economic activity. The updated data of 2019 indicates that the economy tends to recover quickly, the growth slowdown is temporal and a moderate recovery period has started. The increased export and tourism revenues will be the main feeders of growth”.

We wish it could be so.

In spite of the offers and incentives the domestic demand has not increased.  

Household consumption shrunk 8.9% in the last quarter of 2018.

This is in spite of the tax advantages applied to various goods.

The Treasury Secretary is too optimistic and one of the main foundations of his preferred success story is export.

However, the export rise has also fallen to single digits.

Private investments are shrinking in double digits.

Real sector is avoiding investment and shrinking their investment in favour of paying debts. This is because of the high cost of living which prevents consumption.

High interest rates prevent credits from being a solution and credit volume is dissolving rapidly.

The fall in the current deficit which the secretary is proud of is a result of a terrible economic shrinkage.

Most of the imports consist of raw material, intermediate goods and investment goods.

Fall in the import of these three shows the fall in production.

There is no investment, no consumption, and credits cannot help.

All these are the signal of a sharp economic shrinkage in the first quarter of 2019.

It is hard to be optimistic for the next months.

There will be also problems being created during the election period with the short-time solutions.

THE PRESIDENCY FAILED ITS FIRST TEST

President Erdogan had said “the economy will fly” with the presidential system.

However, Turkey recessed from 64th to 71th  stage in per capita income globally.

2019 will not be better.

The slow growth rate after 2020 cannot be the solution to the serious unemployment issue.

In order to prevent these facts from reflecting on the elections, the government is postponing debts and increasing its heroism discourse.

This is why we hear the  flag-azan-perpetuity trio   with a polarizing discourse. But heroism will not fill an empty stomach.

Translated by Güneş İspir