Despite the improvement in global sentiment, Turkeys Central Bank will probably reduce its key rate once again later this week. Meanwhile, economic indicators, although show slight improvement, still indicate that the countrys economic recovery will not be a rapid one. Jobless rate in Turkey declined to 13 percent in the three months through July. Still much higher than last years 9.4 percent

PROTEST: Late in August members of the Confederation of Revolutionary Workers Unions, or DİSK, gathered to protest against the governing Justice and Development Partys decision to transfer resources from unemployment insurance to governments budget
Turkey will probably reduce its key interest rate this week, making it only the third G-20 member continuing to cut borrowing costs, highlighting the depth of a recession the prime minister once forecast the country would be able to avoid.

Still, the Turkish economy follows a similar trend to its European neighbors and is beginning to show signs of improvement. According to the Turkish Statistical Institute's June data, unemployment, peaking at 16.1 percent in February declined to 13 percent in the period from May to July. The declining unemployment rate is an indicator of Turkeys economy slightly improving.

The Central Bank will lower its overnight borrowing rate by half a percentage point to 7.25 percent on Sept. 17, according to 23 out of 24 economists surveyed by Bloomberg. The other analyst forecast a quarter-point reduction.

Another half-point reduction would bring Turkeys rate cuts in the past 12 months to 9.5 percent, more than any other of the 50 central banks tracked by Bloomberg, excluding Moldova. Eleven months after Prime Minister Recep Tayyip Erdoğan declared the global crisis would barely touch Turkey, the country has lost more output than 30 other economies in a study by DekaBank Deutsche Girozentrale.

Except for the politicians in Ankara, regardless of who you talk to in construction, real estate or manufacturing, theres a consensus that this has been by far the worst ever, said Tevfik Aksoy, an economist at Morgan Stanley in London.

Turkeys gross domestic product, or GDP, shrank an annual 7 percent in the second quarter, after contracting a record 14.3 percent in the previous three months, the statistics office reported on Sept. 10. The contraction pushed unemployment to 13 percent in the three months through July, from 9.4 percent a year earlier, the governments statistics office in Ankara said Tuesday.

The jobless rate was 13.6 percent in the month-earlier period and 16.1 percent in February, the highest since records began in 2005.

Turkey shed 417,000 jobs in services, construction and manufacturing in the period from the year earlier, while agricultural jobs rose 253,000, the Turkish Statistical Institute, or TurkStat, said Tuesday. It also announced that the workforce grew about 800,000 measuring against the same period in the previous year.

About 21.9 million people were employed in the period, compared to 22.1 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 48.8 percent from 48.1 percent a year earlier, TurkStat said. It also added, the jobless rate among young people was 23.7 percent.

Bottom of the pack

Frankfurt-based Dekabanks study, published last week, compared the output of 31 economies in their strongest quarter before the crisis with the weakest period since the recession started. It discovered that the Turkish GDP slumped 14.2 percent, compared with 11 percent in Russia and 6.9 percent in Germany.

Turkey has specialized in producing household appliances and cars that were the first to experience a fall in demand when the global economy went into recession.

The economy was too reliant on the industries that were hit the worst, said Aksoy. Turkey didnt have a basket of sectors that it could diversify among.

The economy also shrank more than most because it was so dependent on foreign capital to fund expansion, said Neil Shearing, an economist at Capital Economics in London.

The 12-month current account deficit peaked at $48.9 billion, or about 7.5 percent of GDP, in August last year, the month before Lehman Brothers Holdings Inc. went bankrupt. There was this sudden stop in capital flows, and thats why growth fell off a cliff, Shearing said.

No shiiit, turkey is a super power....

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