ISTANBUL - Turkey’s unemployment rate jumps to 15.5 percent in the three months through February, the highest since records began in 2005, as industrial production slumped and sparked job losses in manufacturing. The rate increased from 11.3 percent in the same period of last year, according to data released by Turkish Statistical Institute in Ankara
The rate increased from 11.3 percent in the same period of last year, the Ankara-based Turkish Statistical Institute, or TÜİK, said on its Web site yesterday. The jobless rate was 13.6 percent in the month-earlier period, reported Bloomberg , citing TÜİK data.
Analysts forecast a further jobless rise in the months ahead as the major emerging market economy slides into recession, adding to pressure on the government to finalize rapidly a fresh loan accord with the International Monetary Fund, or IMF.
Unemployment troubles show rapid growth
The number of jobless surged to a worse-than-expected 3.65 million between December and February, measured on a three-month moving average, from 2.59 million in the same period a year earlier, according to TÜİK. Joblessness among young people jumped to 27.9 percent from 21.2 percent a year earlier.
"The number just affirms the extent of the recession currently inflicting Turkey," Timothy Ash, an economist at Royal Bank of Scotland, told Reuters.
Turkish job losses have mounted after its exports were hammered by the global slowdown, while industrial production fell by almost a quarter in February from a year ago, with the key auto sector hit particularly hard.
The government this week announced a revised forecast for 3.6 percent contraction in the economy this year after gross domestic product tumbled 6.2 percent in the fourth quarter.
"There is much talk that first quarter gross domestic product may have fallen by as much as 10 percent year-on-year," Ash said.
Turkey’s economy contracted 6.2 percent in the last quarter of 2008, the first shrinkage in seven years. The global crisis has slashed demand from Europe for Turkish-made goods such as cars, driving industrial production down 21.3 percent in January, the biggest contraction since the statistics agency began releasing monthly figures in 1986. Turkey lost 184,000 jobs in services, construction and manufacturing in the period from the year earlier, while agricultural jobs rose 259,000, TÜİK said yesterday.
The workforce grew by about 1.1 million from the same period a year earlier, it said.
The unemployment rate for people aged 15 to 24 was 27.9 percent, the agency said. Non-farm unemployment was 19 percent. About 19.9 million people were employed in the period, compared with 19.8 million a year earlier, it said. The workforce participation rate, a measure of how many people of working age are working or seeking employment, rose to 45.8 percent from 44.4 percent a year earlier, according to TÜİK.
The December-February unemployment rate of 15.5 percent marked a sharp rise from 13.6 percent in the November-January period and 11.6 percent during December-February a year earlier. The government expects a 13.5 percent unemployment rate this year and 13.9 percent next year.
The figures will also add pressure on the Central Bank to cut key interest rates again when its monetary policy committee meets later today. It has cut the borrowing rate by 6.25 percent to a record low of 10.50 percent since November. Economists expect a 50 basis point rate cut and forecast a further rise in the jobless rate in months ahead.
"We are at a record high but in all probability it will go a bit higher. A recovery in the short term looks difficult," said Şengül Dağdeviren, ING Bank chief economist in Istanbul. "In the second half of the year there will be a move lower, linked to seasonal developments, but this will depend on how growth comes out this year," she said.
It is now almost a year since Turkey's $10 billion loan accord with the IMF expired and the government has been in no hurry to secure a new deal despite unabated calls from business leaders and investors for a fresh agreement. However, the government is expected to meet an IMF team in the weeks ahead with the aim of finalizing a three-year deal.
"The unemployment data surely will add extra pressure on the government to cut a deal with the fund, especially in the context of a pretty dire fiscal position," Ash said.
The non-farm unemployment rate surged to 19.0 percent from 13.7 percent, while the number of those working in the farm sector rose by 259,000 year-on-year, the statistics office said. The lira currency was little affected by the data, easing to 1.5930 against the dollar on the interbank market.