Mustafah Sunmez writes:  The U.S. will increase interest rates after abandoning the loose monetary policies it adopted against the Great Recession crisis  The EU is not at the same place.   How will re-growth in the U.S. affect other regions?  The changing of the financial climate, especially in the U.S., has brought about the slowing of the economy in emerging countries, including Turkey.  They provide a test case of what may happen in Europe.

Foreign capital invested in Turkey until the US turnaround.  When it returned to the US, the Turkish economy turned south.  As economic growth decreased as production and investments fall, unemployment chas climbed.

The number of unemployed became 3,064,000 in September 2014. The Turkish Statistical Office (TÜİK) declared the official unemployment rate was 10.5 percent. The unemployment rate has been declared to be 9.1 percent for men and 13.6 percent for women. Non-agricultural unemployment is estimated to be 12.7 percent in the same period. Youth unemployment between the ages of 15 and 24 is 19.1 percent.

When economic growth fell below 3 percent, tax income also was reduced.  Budget expenditures increased 11 percent, which are 2 points above inflation. As a result, the budget, which had a deficit of 7 billion Turkish Liras in the first 10 months of last year, in the same period this year had a deficit of 15 billion liras, with an increase of 95 percent.

Interest expenditures within budget expenditures, which reached 45 billion liras, were close to each other in the first 10 months of this year and last year. Interest expenditures are 12.3 percent of the total.

Personnel expenses increased nearly 15 percent to become 94 billion liras, which were 6 points above inflation. The increase in the number of public employees has been the biggest factor in this rise.

A striking increase was experienced in budget expenditures in the premiums of the Social Security Institution (SGK) and its deficit financing items. The SGK took the biggest share of the central budget’s current transfers. From the 363 billion liras of expenditures of the budget in the first 10 months, 22 percent was allocated to its social security deficits and financing.  Fluctuations in emerging markets, first and foremost in Russia, and the expectation of an increase of interest rates from the FED hit the markets big time.

If circumstances force a new raise of the interest rate, this would mean that 2015 will be a new stagnation and shrinking year for Turkey. It should not be too difficult to predict that such an economic climate in a year when general elections will be held will upset voters.

Unemployment among young people is 24.4%; one in four is unemployed.
Erdogan: “Hey, something is rising [in this country]?!” “Did I get the chart wrong?…”