Turkey unemployment highest in half decade

Turkey's unemployment rate in October was the highest in more than five and a half years, the statistical authorities said on Monday, the latest in a slew of bleak indicators for the economy.

The Turkish Statistical Institute, or TurkStat, said the unemployment rate jumped to 11.8 percent in October, a 0.4-point increase from September and a 1.3-point leap from its level a year earlier.

It was also the highest rate since February 2010, when it stood 12 percent, according to TurkStat.

Youth unemployment also rose as 500,000 more people aged 15 and above were without a job last year compared to the previous period, reaching more than three million in October.

The data is the latest blow to the Turkish economy with the lira put under strain by a string of terror attacks, doubts about the sustainability of growth and worries about political instability.

Turkey's robust economic performance – which saw growth of nine percent in 2010 and 2011 – has been a pillar of Erdogan's popular support over the years.

But alarm bells started ringing when data showed the economy shrank 1.8 percent in the third quarter last year, the first such contraction since 2009.

Erdogan has claimed the dramatic depreciation of the lira is a conspiracy to "bring Turkey to its knees" and even equated it to a "terrorist attack".

He did not say who was to blame for the purported conspiracy, or if he was referring to foreign powers or private currency speculators.

But in a sign of the severity of the situation, Erdogan was hosting a meeting of top economic policymakers on Monday, including central bank chief Murat Cetinkaya, at his presidential palace.

Ozgur Altug, economist at BGC Partners in Istanbul, projected on Monday that growth in Turkey would be 2.5 percent in 2017, with economic contraction in the first half followed by a recovery.

Standard and Poor's and Moody's both downgraded the country's credit rating to junk status in 2016 and warned the security situation was likely to weigh on the economy and cause a "general worsening of the investment climate".

After heavy losses pushed the lira close to the 4.0 ceiling against the dollar less than a week ago, the Turkish currency has clawed back some ground against the greenback in recent days as the central bank tightened market liquidity conditions.

But on Monday it was again under pressure, losing 1.5 percent in value against the dollar to trade at 3.8 lira per dollar.