Data showed today, Monday, that Turkey’s unemployment rate rose to 10.2% in October, which could cast doubt on President Recep Tayyip Erdogan’s hopes for re-election next year.
Inflation is expected to ease and the Turkish lira to stabilize, as well as slowing economic growth ahead of presidential and parliamentary elections scheduled for mid-next year, more than 20 years after Erdogan and his party first came to power.
Turkish officials and analysts said jobs and gross domestic product are the hallmarks of the president, whose push for low interest rates in recent years has driven inflation and the lira to its lowest level ever.
“Especially before elections, employment is a problematic situation,” a senior Turkish economic official told Reuters on condition of anonymity.
In response to the currency collapse a year ago, the authorities adopted a policy of tight currency controls, and officials expect the lira to remain stable until 2023.
Annual inflation is expected to fall to about 40% by election time from about 85% at present.
Analysts at JPMorgan predict that inflation will reach 40% by mid-2023 and then recover due to fiscal stimulus ahead of the vote. They said inflation “had a huge impact on real wages,” adding that they would rely more on an expected increase in the minimum wage.
The government expects inflation to approach 20% by the end of 2023.
Data from the Turkish Statistical Institute showed that the unemployment rate rose 0.1 percentage point on a monthly basis to 10.2% in October.
Youth unemployment has risen to around 22%, which is worrisome given that there will be six million first-time voters next year and the vast majority of young Turks will say they want change.
Adding to hiring pressures, a large increase in managed wages could lead to layoffs early next year as economic growth begins to slow after a 3.9% year-over-year growth in the third quarter.
“It is likely that growth in the last quarter will be less than in the third quarter. But the main problem is the first quarter of next year under the current conditions,” the economist said.
Four analysts polled by Reuters expect May inflation to be between 35% and 43% if the lira does not depreciate.
And he came annual inflation rate Consumer prices fell just under 85% in November after hitting a 24-year high the previous month. It is expected to decline sharply due to the base effect at the end of the year and lower global energy prices.
The Turkish lira lost 44% against the dollar last year and has fallen another 29% this year. However, it has been stable since the beginning of October.