PULSE of TURKEY No 10.................. SUNDAY, MAY 31^th 1998

THE BACKGROUNDER

According to a recent publication of the World Bank, Turkey ranks 17^th in the list of biggest economies of the world, overtaking Australia, Argentina, Iran, the Netherlands, South Africa, the Philippines, Colombia and Poland which rank between 18^th and 25^th, respectively. The first 10 in the list are the USA, China, Japan, Germany, India, France, the UK, Italy, Brazil and Mexico, respectively.

The most interesting aspect of this rating is that it is based on purchasing power parities which put Turkey’s GDP at $379.9 billion and the per capita GDP at $6,060, the population being 63 million in the estimates.

The official figures for Turkey’s GDP and per capita income, however, are just under $200 billion and just over $3000, respectively.

In other words, the purchasing power parity calculations double up Turkey’s economic performance and ratings both overall and on per capita basis.

Columnist Yalçın Doğan reports in Milliyet (May 27^th) that a survey carried out by the SPO (State Planning Organization) with the help of the OECD and the SSI (State Statistical Institute) puts Turkey’s GNP at $500 billion and the per capita income at $9000. President Demirel also quoted these figures on May 29^th in his address to his old school friends at the 50^th anniversary of their graduation from Istanbul Technical University. Leaving aside how accurate they are, these unbelievable estimates, based on purchasing power parity calculations, evoke the question of where these differences stem from.

Even dismissing the tripled figures on purchasing power calculations, the consumption figures of Turkey confirm that the official GNP and per capita income figures of $185-200 billion and $3000-3500 are totally wrong. This is because there is at least a 100% unregistered economy in Turkey, and the tremendous incomes earned from real estate sales and the finance sector are not declared correctly for tax evasion purposes.

Consequently, the official GNP figures of Turkey are far below the real economic performance of the country. This was best seen after the economic parcel launched on April 4^th, 1995 by the Çiller government. Even though no loans were received from abroad for over a year in this economic austerity period Turkey managed to repay its external debts regularly, much to the surprise of economists worldwide. They had not taken into account Turkey’s unregistered economy in their calculations and projections.

Coupled with the dynamism of private enterprise, the Turkish economy has been achieving a 7-8% economic growth per year in recent years, excluding the crisis year of 1994, despite a very high inflation rate – another unconventional, indeed unbelievable phenomena for economists.

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