Turkey embraces batch of good news with budget surplus, lower unemployment

The announcement comes only days after news of an 8.8 percent gross domestic product (GDP) growth recorded in the second quarter hit the headlines and at a time when most developed economies in the West, including the United States, are struggling to put their own houses in order as their economies are experiencing trouble on multiple fronts. The news lifted the shares at the İstanbul Stock Exchange (İMKB). The benchmark İMKB-100 index rose 1.16 percent over the closing a day earlier during the second trading session on Thursday.

The surplus the Turkish budget experienced in the first eight months of this year is a success story, Finance Minister Mehmet Şimşek said, announcing the figures on the Treasury’s spending and revenues between January and September. The country’s budget suffered a budget deficit of TL 14.4 billion in the same period a year ago.

According to the figures Şimşek provided on Thursday, budget expenditures increased by only 7.4 percent year-on-year to TL 196.9 billion, whereas its revenues went up by 17.7 percent to TL 199 billion in the first eight months of this year. Turkey’s noninterest budget surplus -- the figure calculated when all interest expenses are assumed null -- grew by 62 percent compared to the same period in 2010 and became TL 33.8 billion, more than twice as much as the year-end target in 2011. “We will continue to follow a tight fiscal policy that is going to minimize the possible impact of external shocks on Turkey’s economy. We will not hesitate to take necessary measures to that end,” Şimşek also said.

Şimşek’s ministry has in recent years intensified audits to fight tax evasion and also adopted a policy of increasing the rate of tax collection in the country. The Justice and Development Party (AK Party) government collected 85 percent of the tax it was supposed to collect last year. In earlier remarks, Şimşek said the Turkish fiscal policy’s focus this year will be on increasing employment across the country, through easing employment costs on the part of employers as the state’s ability to collect taxes increases. The government, which won a third term in the June 12 parliamentary elections, however, has regularly dismissed the possibility of tax hikes this year.

The unemployment rate in Turkey has been on the decline for over a year now after the country’s labor market was hit by the global financial crisis of 2008-09. At the height of the global financial turmoil, the Turkish joblessness rate reached 15 percent. The 9.2 percent observed in June, therefore, marks a substantial improvement as a result of the country’s fight against unemployment. Turkish Exporters Assembly (TİM) President Mehmet Büyükekşi said the visible drop in unemployment was made real largely thanks to the country’s re-energized sales of goods to overseas. Turkey’s export volume was at $114 billion in 2010 and is expected to reach $135 billion this year. According to TİM, the country’s exports neared $92 billion as of Thursday.

In an interview with the Anatolia news agency on Thursday, Labor and Social Security Minister Faruk Çelik said fighting unemployment will remain a top priority for the government. “The best way to do this is to increase the skills of our country’s labor force,” he was quoted as saying. The AK Party government maintains that what is missing in the labor market is not job opportunities but skills that employers are looking for. It has been introducing vocational training courses across the country through the Turkish Employment Organization (İŞKUR).