Growth Continues to Slow Down
Ozan Bakış and Mine Durmaz
In second quarter of 2016, quarter-on-quarter growth rate of 0.3 percent and year-on-year growth rate of 3.1 percent remained below expectations. Leading indicators do not constitute a positive outlook also for growth in third quarter. Almost all indicators point out that the economy will be downsizing. Especially the decreasing trend in private consumption continues. We predict that even public expenditures and private investments components, which drove the growth in second quarter, will shrink in third quarter. Both import and export are predicted to decline from quarter to quarter. Since the decreasing trend in imports is relatively higher, the contribution of net exports is expected to be positive, albeit too small. In the light of fully released July, partially released August, and September leading indicators, we predict quarter-on-quarter growth rate to be minus 0.2 percent and year-on-year growth rate to be 2.6 percent.
LARGE EMPLOYMENT LOSSES IN MANUFACTURING
Seyfettin Gürsel Gökçe Uysal and Selin Köksal
Seasonally adjusted labor market data show that nonagricultural unemployment rate increased by 0.6 percentage points and reached 13.2 percent in the period of July 2016. In this period, the number of people employed in agriculture, services and construction sectors increased by 76 thousand, 21 thousand and 5 thousand respectively. On the other hand, there is an employment loss by 76 thousand in the manufacturing sector. In line with these developments, the number of unemployed in non-agricultural sectors grew by 50 thousand in one month and reached 3 million 327 thousand. The unemployment rate which was 11.8 percent in the period of April 2016 increased by almost 1,5 percentage points and reached 13,2 percent in July 2016. Betam’s forecasting model predicts that the increase in non-agricultural unemployment will continue in the period of August.
Seyfettin Gürsel, Ozan Bakış and Selin Köksal
Increase in labor productivity showed by far the greatest contribution to Turkey’s high economic growth rates before the global economic crisis (2002-2008). When high growth rates combined with the appreciation of Turkish Lira against US Dollar on a vast scale, the increase in dollar denominated GDP per capita recorded a great jump. Leaving the global economics crisis aside during which GDP decreased, employment rate and labor productivity almost equally contributed to GDP per capita increases during the years of strong exit from crisis (2010-2011). On the other hand, we know that Turkish Economy grew since 2012 between 2-4 percent after having implemented “balanced growth” policies in order to cope with deepening macroeconomic imbalances. This low GDP growth slowed sizably the increase of GDP per capita. During this period, we observe that labor productivity followed a fluctuating course in terms of GDP per capita contribution (first negative then slightly positive). Finally we would like to underline that, due to very limited increase in total labor productivity, the increase in GDP per capita remained very low in the last four years.
Bulent Anil, Duygu Guner, Tuba Toru Delibasi and Gokce Uysal
Measuring the gender peer effects on student achievement has recently attracted a lot of attention in the literature. Yet, the results are inconclusive. A substantial amount of research shows that having relatively more girls in a division increases the academic achievement of all students. Nevertheless, the identification of pure gender effects remains a challenge due to the fact that girls outperform boys in overall academic performance. Our study overcomes this identification problem in a setting where girls are not academically better. Using 2009-2010 school year data on 8th graders in Turkey, this paper disentangles pure “academic” peer effects and “gender” peer effects. Our estimations reveal that the higher the share of females in a division, the lower the likelihood that a student drops out. One standard deviation increase in the share of females in the division decreases the likelihood of dropout by 0.3 percentage points. This result holds even though females are 9.32 percentage points more likely to drop out. These findings are robust to the inclusion of various control variables e.g. parental and academic background of the student, school and regional characteristics. We also find that the gender peer effects are prevalent in both females and males.
HARSH BRAKE IN 2ND QUARTER GROWTH
Seyfettin Gürsel and Selin Köksal
From the first quarter of 2016 to the second, GDP grew by 0.3 percent which is below expectations. On yearly basis, Turkish economy also showed low performance by growing 3.1 percent in the second quarter of 2016.
Private consumption and net export are two components that dragged down the quarterly economic growth. The negative contribution of net exports was expected. However the fall by 2.8 percent in exports combined with the unexpected decline in private consumption by 0.5 percent affected economic growth in a negative way.
On the other hand, a positive surprise came from, private investments that grew by 6 percent and government spending contributed also positively to GDP growth increasing by 3.5 percent. Finally, these opposite changes produced a limited growth in quarterly GDP.
STRONG INCREASES IN UNEMPLOYMENT CONTINUE
Seyfettin Gürsel, Gökçe Uysal and Selin Köksal
Seasonally adjusted labor market data show that nonagricultural unemployment rate increased by 0.6 percentage points and reached 12.9 percent in the period of June 2016. During this period, the number of people employed in agriculture, manufacturing and construction sectors decreased respectively by 129 thousand, 56 thousand and 66 thousand. In the service sector, the increase in employment remained limited to 28 thousand. Thus, the number of non-agricultural unemployed grew by 160 thousand in one month and reached 3 million 257 thousand. The unemployment rate which was 11.8 percent in the period of April 2016 increased by more than 1 percentage point and was at 12,9 percent in June 2016. The weak performance of GDP growth is reflected on labor market. Betam’s forecasting model predicts that the increase in non-agricultural unemployment will continue in the period of July 2016.
AN UNEXPECTED AND STRONG INCREASE IN UNEMPLOYMENT
Seyfettin Gürsel, Gökçe Uysal and Mine Durmaz
Seasonally adjusted labor market data show that nonagricultural unemployment rate increased by 0.5 percentage points and reached 12.2 percent in the period of May 2016. Betam’s forecasting model predicted that the nonagricultural unemployment rate would remain constant in the period of May 2016. This unexpected increase in unemployment is mainly because of the weak increase in employment against the increase in the labor force. The increases in nonagricultural employment in services and in manufacturing were limited to 53 thousand and 5 thousand respectively. However, employment decreased in the construction sector by 11 thousand. Compared to the May 2015 period, number of unemployed women increased by 9 thousand whereas number of unemployed men increased by 92 thousand in the period of May 2016.
STRONG INCREASE IN MANUFACTURING EMPLOYMENT
Seyfettin Gürsel, Gökçe Uysal and Mine Durmaz
Seasonally adjusted labor market data shows that nonagricultural unemployment rate remained constant at the level of 11.5 percent in the period of April 2016. Betam’s forecasting model estimates that the nonagricultural unemployment rate will remain constant in the period of May 2016. In this period, strong increases were observed in both nonagricultural labor force and nonagricultural employment. Remarkably, employment increases are driven mainly by the manufacturing sector. Note that the number of unemployed females increased and the number of unemployed males declined in the period of April 2016 compared to April 2015.
Ozan Bakış, Seyfettin Gürsel and Melike Kökkızıl
Various effects of minimum wage increased in January 2016 by 30 percent are still question of debate. One of the concerns for the possible effects of this high increase is on wage-employment relation. More speciﬁcally, it stands an important question about the effect of wage increase; in which direction and to what extent it will affect the informality among wage earners. Even though relevant studies from several countries claim that the effect of minimum wage hike has no signiﬁcant effect on employment, they reveal an adverse effect on informal employment. In the context of Turkey, the studies establish that relatively same increase of minimum wage recorded in 2004 has an impact on informality, albeit related publications are few. It is too early to make a comprehensive research on the effects of the recent rise in minimum wage. Nevertheless, this study illustrates a notable indication that minimum wage increase is adversely affecting informality based on the large differences observed in the share of minimum wage earners in sectors and informality rates in sectors in the period of February 2014-2015 and February 2015-2016.
Ozan Bakış, Mine Durmaz, Melike Kökkızıl
Leading indicators continue to move in opposite directions as mentioned in our previous research briefs. The first quarterly data of 2016 reveals that recovery in investment stands out and a moderate progress in consumption persists. Nonetheless, government spending exhibits a sharp decline. As for investment, significant increases are seen in import of investment goods and its production; however, production of commercial cars will remain limited compared to our previous calculations.
Updated data indicate that negative contribution of net export to the growth will become clearer. Our estimates for quarter-on-quarter and year-on-year growth rates are revised to 0.6 percent and 3.5 percent, respectively. In addition, we predict the current account deficit to GDP ratio to be 4.2 percent and the gold-excluded ratio to be 4.8 percent.