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Erdogan's Slog in Cities Underscored by Decade-High Joblessness

Turkey’s ranks of unemployed swelled by 366,000 people in one month, pushing the jobless rate to the highest level in a decade.

Erdogan's Slog in Cities Underscored by Decade-High Joblessness
A man uses a mobile phone beside a street vendor’s display of Turkish flags and an image of Kemal Ataturk, founder of the Turkish republic, in the Sultanahmet district of Istanbul, Turkey. (Photographer: Kostas Tsironis/Bloomberg)

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The rising tide of unemployment is driving Turkey’s economy deeper into distress as President Recep Tayyip Erdogan’s party refuses to turn the page on its electoral defeat in the country’s biggest city.

Turkey’s jobless rate surged to its highest in a decade at 14.7 percent in January, with the ranks of the unemployed swelling by 366,000 people in one month. Most of the municipalities won by the opposition from the ruling party or its nationalist partner in last month’s elections suffered from unemployment that was comparatively worse than in other parts of Turkey, official data show.

The severity of the job losses despite a last-ditch spending blitz by the government underscores the economic challenges facing Turkey after it entered its first recession in a decade following a currency rout last year that touched off inflation. The biggest upset of the March 31 ballot was the loss of the mayoralty in Istanbul, where Erdogan’s AK Party is preparing to apply for a rerun of the vote.

Erdogan's Slog in Cities Underscored by Decade-High Joblessness

“We are going to ask for fresh elections in Istanbul by using our right to make an extraordinary objection,” said Ali Ihsan Yavuz, a deputy head of the AKP.

Erdogan’s candidate lost the mayoral race in Turkey’s largest city to Ekrem Imamoglu, according to an unofficial tally, a blow for Islamists who had controlled Istanbul since 1994.

‘Widespread Irregularities’

The refusal to surrender despite a margin of around 14,000 votes is fueling a spat with the opposition. The AKP has said that it will officially demand a rerun from the High Election Board because the vote was tainted with “widespread irregularities.”

The opposition has rejected those claims as baseless and said the ruling party’s inability to accept defeat was the real reason behind their pressure on the election board. The AKP has pushed for a partial recount of all votes, saying the number of voided ballots was especially high in neighborhoods where the ruling party has traditionally been strong.

“There is an increased chance of new elections in Istanbul,” Eurasia Group said in an emailed note on Monday. “Such a decision would create significant uncertainty for the markets. With fresh elections on the horizon, the domestic agenda would be consumed by the AKP’s desperate efforts to win back Istanbul.”

Economic Angst

Even as authorities sharply ramped up fiscal stimulus during the first three months through March, the effort has so far brought little in the way of relief. The number of people without jobs has reached 4.7 million people, with youth unemployment jumping to 26.7 percent, a record high, according to data going back to 1988.

Turkey has rolled out a recapitalization plan for state banks, but the program unveiled by Treasury & Finance Minister Berat Albayrak last week has underwhelmed investors. Meanwhile, the economic pain isn’t letting up.

“The rise in unemployment will continue -- albeit at a slowing pace,” said Muammer Komurcuoglu, an Istanbul-based economist at IS Investment. “A sharp monthly deterioration in job creation continues to take place across all the sub-sectors. We are seeing very clearly the impact of the economic slowdown on unemployment.”

Istanbul Fixation

Erdogan’s refusal to concede defeat in Turkey’s commercial hub has been condemned by political opponents as an attack on Turkey’s democratic foundations. Among the vocal critics of the AKP’s reaction to losses at the ballot box was Mustafa Sonmez, an economist known for opposing the government’s policies.

Sonmez was detained on Sunday and later released after being questioned largely over his tweets over his tweets following the vote, according to his lawyer, Husniye Aydin. In his latest posts on Twitter, Sonmez criticized authorities for not recognizing the opposition’s candidate as the winner of Istanbul’s mayoral race.

“They could’ve invited me to testify, and I’d have obeyed,” Sonmez said by phone on Monday. “Sending police to my door is disgraceful. They’re shooting themselves in the foot.”

--With assistance from Asli Kandemir and Taylan Bilgic.

To contact the reporters on this story: Selcan Hacaoglu in Ankara at shacaoglu@bloomberg.net;Onur Ant in Istanbul at oant@bloomberg.net

To contact the editors responsible for this story: Onur Ant at oant@bloomberg.net, Paul Abelsky, Amy Teibel

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