Second, despite net sales of the major manufacturing companies having decreased by almost 10 percent, the rate of profit across the country’s 500 largest manufacturing companies as listed by the İstanbul Chamber of Industry (ISO) rose by 23 percent. None of the major companies fell into major difficulties, such as debt default.
In this period a significant decrease in the cost of finance, thanks to Turkey’s robust and risk-free economy, was an important factor. Also, the cost of major inputs such as energy and other commodities decreased because of the crisis. A third factor in rising profits was relative depreciation in the real exchange rate. A final and less positive factor is the wide range of firings that resulted in major cost cuts in the year of the crisis.
Also, the government actively supported the most vulnerable parts of the economy, such as those who lost their jobs, small and medium-sized enterprises (SMEs) and major sectors that create employment and are exposed to export fluctuations. The amount of direct and indirect support provided by the government had reached nearly $50 billion as of the first half of 2009. Despite that, unlike the US, EU and Japan and other major emerging economies, public balances were kept under control in Turkey. For instance, the ratio of budget deficit to GDP was 5.5 percent in 2009 and is expected to drop below 3 percent in 2010. Public debt rose to 46.5 percent of Turkey’s GDP in 2009 from 40 percent in 2008, and it is expected to start declining in 2010. In this regard, the timing of the government in applying strategies for dealing with the crisis was appropriate and the capacity of the Turkish economy for returning to a rapid growth trajectory had major advantages.
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As a matter of fact, thanks to all these measures, Turkey’s return to growth has been magnificent, at least in the first half of 2010. The rate of real growth, as compared with the same period last year, was almost 12 percent, the highest rate after China. Expected real growth in the second quarter is expected to exceed 8 percent, as well. Year-end growth is expected to reach around 6 percent.
The situation in the labor markets in the world has been the most dramatic issue both during and after the crisis. There is a significant time lag (1-1.5 years) between growth and employment creation following economic crises. In other words, growth will not automatically be reflected in employment creation. This constitutes a sensitive social issue in almost every country. However, according to recent data pertaining to growth and employment generation, it can be seen that Turkey is in a process of rapid departure from the norm in this field of the economy, as well.
In the worst period of the crisis, unemployment in Turkey was one of the most dramatic cases in the world. As can be understood from the table provided, the rate of increase in unemployment was above 50 percent as of February 2009, when unemployment rose to 16.3 percent from 10.7 percent at the beginning of the global crisis. However, as of May 2010, unemployment receded to 11 percent. As compared with the beginning of the crisis, the rate of increase in unemployment is only 2.8 percent. In this regard, after Brazil, where unemployment decreased compared to the pre-crisis period, Turkey has been the most successful country in terms of employment creation.
