Labor share in GDP decreased despite high growth rate

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Turkey's economy expanded 21.7 percent year-on-year in the second quarter of 2021, the Turkish Statistical Institution (TurkStat) announced today (September 1).

It has been the highest annual growth rate since 1999.

The country's gross domestic product (GDP) at current prices increased 52.4 percent to 1.58 trillion Turkish lira (188.6 billion USD) in the April-June period, according to TurkStat data.

Despite the growth, income per capita in the country declined to 8,597 dollars. It was 9,213 dollars in 2019, 9,693 dollars in 2018 and 10,597 dollars in 2017.

The labor share in the GDP also decreased. Fatih Özatay, a professor of economics, said on Twitter that "One of the most interesting points in the new GDP data is that the wage earners' share decreased by 3.8 points compared to the second quarter of 2019 and by 2.6 points compared to the first quarter of 2021. There is a significant growth but employees' share in this growth is becoming less and less, not good news."

Prof. Veysel Ulusoy said, "There is an impoverishing growth in Turkey."

Growth in sectors

Among the activities constituting GDP, the value-added rose 45.8 percent in services and 40.5 percent in the industry, while financial and insurance activities decreased 22.7 percent during the same period.

Slower growth rates were seen in the construction sector with 3.1 percent and in agriculture, forestry and fishing with 2.3 percent.

According to data, final consumption expenditures for households increased 22.9 percent while government final consumption rose 4.2 percent year-on-year in the second quarter of 2021.

Exports of goods and services jumped 59.9 percent during the same period while imports of goods and services posted a 19.2 percent increase.

Turkey's purchasing managers' index (PMI) for the manufacturing sector read 54.1 in August, its highest level since January.

Last month, Turkey's exports hit 16.4 billion dollars, rising 10.2 percent year-on-year, while imports jumped 16.8 percent to $20.7 billion. (HA/VK)