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Turkish Income per capita Rises by $2,020

Istanbul, Turkey | March 17, 2008 by D-8 Secretariat

The Turkish Statistics Institute (TurkStat) has completed a new national income formula it had been working on for years with which all national income figures since 1998 have been recalculated, as reported by media source in Turkey.

According to the new formula income per capita increased by $2,020 in 2006 — from $5,480 to $7,500 — in a 31.6 percent rise over the previous year. Gross domestic product (GDP) in 2006 climbed to $758 billion from $576 billion. The income per capita figure of 2007 will be released on March 31, and it is expected to be around $8,500.

The main factor behind the increase in national income is the growth of the manufacturing industry by more than previous estimations. In former calculations the number of enterprises employing 10 or more employees was forecast to be 11,293 for 2006. But in the new calculation it was 27,813. The other factor responsible for the increase is the housing sector. In the previous calculation the number of buildings was cited as 13 million, while in the new calculation the number used was 19.2 million. TurkStat President Ömer Demir announced the national income results from the new formula at a press conference on Saturday in Ankara. He said the mistakes in former calculations were a shortcoming of the institution.

Demir noted that the number of unregistered businesses can be calculated more accurately with the new formula, adding that this also had an effect on the rise of national income. Demir said they are able to develop a much clearer picture of the economy with the new formula, also noting that the formula complies with EU standards.

He stated that there were many reasons to revise the national income calculations. The most significant of these, he noted, were the new surveys that could not be performed before, the gathering of direct data in some fields instead of using calculations, the new population registry system and the better calculations of the contribution by unregistered workers to the economy. Demir said there were increases in all the national income calculation revisions across the world. “That’s because the estimations and calculations are done according to the minimum level, and revisions increase these numbers,” he said.

Demir said the manufacturing, housing and services sectors grew in the new data; however, fishing, retail, hotel and restaurant businesses, energy and public services shrank.

In response to a question over the variation between the new and old data, Demir said this was not something they are proud of at TurkStat. He noted that they had taken a number in the results of a manufacturing entities survey in 1992 as a base; then they updated the number by factoring in employment results. He said one considers these numbers correct until another survey is performed. He noted that there should not be such variation but emphasized that now they can check the new numbers with several sources such as the Revenues Administration, which they could not easily access in the past.

According to banking experts at major investment banks Morgan Stanley and Deutsche Bank, the adjustment in Turkey’s national income will positively affect Turkey’s credit ratings in the medium term, and country risk will be assessed at a lower level. Turkey will be considered among the countries that have $500-$600 billion benchmark national income. The adjustment in the national income will also reduce the ratio of total debt, calculated as the current account deficit over national income. Turkey’s current debt to national income ratio of 57 percent is comparatively higher than other emerging economies. With the new income level this ratio will decrease. The ranking of Turkey among United Nations and International Monetary Fund (IMF) member states will also change.

Dr. Dipo Alam, the D-8 Secretary General, expresses his belief that the success story of Turkey in boosting the GDP  performances can be a good illustration to other member states as well, and hope that Turkey can continously play its major role in speeding up the Preferential Trade Agreement so that they can be implemented as soon as possible without delay.

“I am sure that all this encouraging development will all add up into an increasing volume of intra-trade in D-8,” Dr. Alam says in the organisation headquarter on Friday.

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