The latest data on the Turkish economy reveals a mixed picture in the labor market. While the number of unemployed decreased to 2 million 799 thousand, the number of employees increased to 32 million 479 thousand. Although the employment rate was 48.5 percent, the labor force participation rate of working-age people decreased to 52.7 percent. While the idle labor force rate, which includes the unemployed as well as those who have given up looking for a job and those who cannot work sufficiently, remained at 29.9 percent, this table showed that the decrease in unemployment was not reflected to the same extent in the labor market in general.
NOTHING HAPPENED IN THE HOUSE
In addition to this outlook in the labor market, price increases on the housing front continue to lag behind inflation. CBRT’s July House Price Index increased by 1.5 percent monthly and nominally 25 percent annually. In the same period, house prices decreased by 5.1 percent in real terms. Thus, despite the nominal increase in house prices, the inflation-adjusted value loss continued.
EXTERNAL DEBT PROBLEM
On the financing side, the increase in short-term external debt stock draws attention. According to CBRT data, short-term external debt stock increased by 2.5 percent compared to the previous quarter, reaching 170.7 billion dollars as of the end of June. According to the remaining maturity, which shows the debts that must be paid within the next year, regardless of the original maturity, the short-term external debt stock was calculated as 239.5 billion dollars. Short-term external debt stock originating from banks increased by 5 percent in the same period, reaching 74.9 billion dollars. But dwork During the period when the increase in financing needs was monitored, there was a recovery in the CBRT reserves in recent weeks. According to the calculations of QNB economists, the Central Bank purchased approximately 3.3 billion dollars of foreign currency in the week of August 14. While the total foreign exchange purchases in the last three weeks reached 11.2 billion dollars, it was calculated that the net foreign exchange sales during the Iran war decreased to approximately 6.6 billion dollars.
RESERVES INCREASED
It was calculated that in the same week, total reserves increased by 5.1 billion dollars to 183.5 billion dollars, net reserves increased to 67.1 billion dollars, and net reserves excluding swaps increased to 54.4 billion dollars. In addition to the CBRT’s foreign exchange purchases, the effect of the rise in gold prices on the dollar equivalent of reserves also played a role in the increase in reserves.
WILL INTEREST RATES DECREASE?
Expectations regarding the future direction of monetary policy in the economy are also closely monitored. Deutsche Bank CEEMEA and LATAM Research Director Christian Wietoska stated that there is room for gradual relaxation of the CBRT, and predicted that the policy rate could drop to 35-36 percent at the end of the year. On the Deutsche Bank side, there is an expectation that the interest rate reduction process will restart as of September.
BUDGET DEFICIT
On the fiscal policy side, July budget data again pointed to a strong deficit, following the surplus outlook in June. While the central government budget had a deficit of 378.1 billion TL in July, the primary deficit was 51.3 billion TL. In June, the central government budget had a surplus of 114.2 billion TL, and the primary balance had a surplus of 315.8 billion TL. The rapid increase in expenses came to the fore in the deterioration in July. While budget expenditures increased by 59.8 percent compared to the same month of the previous year and reached 1 trillion 790.5 billion TL, the increase in budget revenues remained at 28.8 percent. Interest expenses in the same month amounted to 326.8 billion TL.
BALANCE HAS NOT BEEN ESTABLISHED
Commenting on the last table, Institutional Economics Expert Gülsev Duran said, “When the indicators are evaluated together; the high idle workforce in response to the improvement in unemployment and reserves, the decline in industrial employment, the real loss in housing prices, the increase in short-term foreign debt and the budget deficit that became evident in July indicate that the balancing process in the economy is progressing at different speeds in different areas.”
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