Turkey’s unemployment rate edged up to 10.2 percent in October, data showed on Monday, posing a potential challenge to President Recep Tayyip Erdoğan’s re-election hopes next year, even as inflation is set to dip and the currency should remain largely stable, Reuters reported.
Economic growth is also expected to keep cooling to below trend levels ahead of presidential and parliamentary elections to be held in May or June, more than 20 years after Erdoğan and his Justice and Development Party (AKP) first came to power.
Turkish officials and analysts said jobs and GDP posed election wildcards for the president, whose pro-growth political reputation has been bruised in recent years as inflation soared and the lira cratered to historic lows.
“Especially before the elections, employment is a problematic situation,” said one senior Turkish economy official, requesting anonymity to speak openly.
In response to a currency crash a year ago, authorities adopted a policy of tightly controlling foreign exchange, and officials expect the lira to remain steady well into 2023.
The jobless rate rose 0.1 percentage point month-on-month to 10.2 percent in October, up from a more than four-year low of 9.8 percent in August, Turkish Statistical Institute data showed.
Youth unemployment climbed nearly two points to just below 22 percent, a potential concern given that there will be 6 million first-time voters next year and with a large majority of young Turks saying they want change.
Adding to employment pressures, a hefty hike in the minimum wage could lead to layoffs early next year, while economic growth is starting to ease after an annual expansion of 3.9 percent in the third quarter.
“There is likely to be lower growth in the final quarter compared to the third quarter. But the main problem is the first quarter of next year under current conditions,” the economy official said.
Four analysts surveyed by Reuters forecast May inflation would be in a range of 35 percent to 43 percent unless there is a fresh lira depreciation.
Annual consumer price inflation (TRCPIY=ECI) was just below 85 percent in November after touching a 24-year high a month earlier. It is expected to decline sharply as a result of the base effect at the end of the year and falling energy prices globally.
The lira tumbled 44 percent against the dollar last year and has weakened a further 29 percent this year. However, it has held steady since early October.