Turkey’s economy grew last year at the fastest rate in nearly 40 years, surging past many expectations. That provided politicians with a bit of good news to shout about after a month of headlines that fuelled scepticism about the country’s ambition to join the EU.
GDP surged 8.9% year-on-year, the fastest growth rate since 1966, Economy Minister Ali Babacan told the press on March 31.
With the Turkish economy growing 5.9% last year, a poll by Reuters had forecasted 7.8% GDP growth for 2004. Meanwhile, GNP climbed to 9.9%, exceeding a Reuters forecast of 8.6%. An analyst told Reuters that the surprise number came from more growth in farming than expected.
The news was a welcome change of subject for the Prime Minister Recep Tayyip Erdogan, who has recently endured defections from his party and criticism for a series of lawsuits against journalists and political opponents. European politicians have also publicly wondered whether the pace of EU-minded reforms in Turkey is slowing, and asked for an investigation into police misconduct for their role in ending an International Women’s Day demonstration in early March.
The growth was credited by many to a 3-year, $19bn programme worked out with the International Monetary Fund (IMF) in 2001 after a harsh recession shrank national output by 10% and left millions jobless. Turkey’s GDP was $144bn in 2001, and last week’s statistics show it grew to $301.5bn in 2004.
The data, from the State Institute of Statistics (DIE), showed explosive growth in the first and second quarters of 2004, at 13.9% and 15.7% respectively. The pace cooled in the second half, coming in at 5.7% in the third quarter and 6.6% in the fourth.
Many economists had expected no growth from the agricultural sector of the economy, yet it expanded 9.1% in the fourth quarter. Growth in the sector could help provide cheap raw materials for Turkey’s manufacturers and help fight inflation.
Deputy Prime Minister Abdullatif Sener claimed the economic expansion rate to be the best among members of the 30-nation Organisation of Economic Co-operation and Development (OECD).
Erdogan credited his own Justice and Development Party (AKP) in a speech to partisans in the south-eastern city of Gaziantep. He told party deputies that they were responsible for much of Turkey’s economic growth. The backslapping may be aimed at stemming the trend of deputies quitting the party, some analysts commented, as several did so in March, including a former minister.
Support for Erdogan has also slipped in the media. Two Turks have been ordered by Turkish courts to pay YTL5000 ($3700) in damages to Erdogan, after one made comments Erdogan objected to in a newspaper story and another, a cartoonist, drew him as a cat in political cartoons.
Cries about a lack of media freedom have only added to a chorus of doubt over the country’s progress towards EU membership. Critics wonder whether a series of reforms will be completed to further liberalise the country, or whether the pace has slowed fatally.
Doubters say they got more evidence that the reforms will not stick after the police beat some women and tear-gassed others involved in an International Women’s Day demonstration.
At the same time, while the glowing GDP data served as a distraction from the politics, this was not quite enough for some observers. An OECD report released on March 24 said that employment is still lagging. “Job creation remains too weak to reverse the sharp deterioration in the labour market since the 1990s,” the report stated.
Although the unemployment rate fell from 10.5% in 2003 to 10.3% in 2004, according to the newspaper Zaman, the increasing number of people looking for jobs has kept the country’s unemployment rate from falling further. According to the paper, there were 644,000 new jobs created last year and an increase of 649,000 in the labour force. There were 896,000 new jobs created in the private sector and a reduction of 252,000 in the public sector.
Yet even with so many fewer government employees, private interests in Turkey are still finding the country’s bureaucratic procedures cumbersome. The OECD report said Erdogan’s government should be focused on streamlining bureaucratic procedures.
The organisation said that establishing a company in Turkey is “complex and time-consuming”, requiring 19 separate procedures. Many small companies prefer to remain unofficial instead of registering, which also means they don’t pay taxes.
That is money the state could use for job-creation programmes of debt reduction, boosting GDP even further, and giving Erdogan and his ministers something to keep shouting about.
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