The growth rate of Gross Domestic Product (GDP) is the most frequently referred to indicator of the economic growth of an economy. As we have discussed elsewhere, GDP gives us the aggregated monetary value of all the final goods and services produced within the borders of that county in a given year. Accordingly, GDP growth rate is an indicator of the rate at which the total output that a country produces grows.
While it is plausible to assume that unemployment rate will fall as the GDP grows with the increasing output, this inverse relation may not always hold. It is quite possible that the unemployment rate in an economy may not decline despite positive growth performance. Economists call this situation “jobless growth”.
In Table 1, we compare Turkey’s post-2005 calendar adjusted real growth rate (with respect to the same quarter of the preceding year and at 1998 prices) with her seansonally adjuted unemployment rate.
From the first quarter of 2005 until the first quarter of 2008 Turkey grew on average 6.8% percent. From the second quarter of 2008 until the fourth quarter of 2009, Turkey shrunk on average 4.6%. Starting with the last quarter of 2009, Turkey began to grow again and from 2010 until today, Turkey grew on average 5.3%. Data shows that after the crisis, growth rates first resumed back to their pre-crisis levels and then began to decline, reaching 3.8% in the second quarter of 2015, with below-target (which is 5%) average of 2.7% during the last four quarters.
In the same table, we observe that the 6.8% growth rates between 2005 and 2008 do not really have an affect on the unemployment rate which hovers around 10.3%. Yet, on the other hand, the recessionary period following the 2008 crisis affect the unemployment rate rather dramatically, causing a jump up to 14.5%. In other words, the effects of recession are reflected as a rise in the unemployment rates.
When studying the post-2010 period, it is possible to make an analysis similar to that of 2005-2008 period. Even though the growth rates have reached back to positive levels (around 5.3% on average), this improvement did not affect the persistent levels of unemployment which continues to hover around 10%. This, once again, makes it possible for us to refer to “jobless growth” when making sense of the economic growth performance of Turkey.
Sources:
Unemployment dataset is downloaded from the website of Turkish Statistical Institute, “Labour Force Statistics” link.
Statistical Table: ”Seasonally Adjusted Main Labour Force Indicators”
GDP dataset is downloaded from the website of Turkish Statistical Institute, “Gross Domestic Product by Production Approach” link.
Statistical Table: ” Per Capita Gross Domestic Product (1998-2012)”
Image: Nalan Yırtmaç
