In 2018, the Turkish lira depreciated by 39 percent against the US dollar. That was followed by steep increases in unemployment and inflation, the combination of which yields a 60 percent increase in Turkey’s so-called “misery index.” In other words: people are hurting.

What oil pump prices are for Americans, Lira depreciations are for Turks. We take it as a measure showing that something is wrong with the Turkish economy. Considering that Turkey is deeply dependent on international markets, this is not a bad way to assess the health of the economy. Since last year, it’s clear that depreciation is not a momentary lapse. There is something very wrong with the Turkish economy..

“But why?” someone asked me the other day. “Isn’t that good for Turkish exports? Is Turkey not an exports-based economy?” The simple answer of course, is no. Turkey has never been an exports-based economy. It exports $157 billion worth, but its economy is not based on that.

Exports have only created by a few thousand of Turkey’s 1.5 million companies. Our economy is much like the American economy in this sense. The contribution of exports to growth is rather limited in both. It’s domestic consumption that counts. The higher Turkey’s misery level, the lower its domestic consumption, limiting growth substantially. That’s how it happened in recent history, and that’s what appears to be happening once again. Rebalancing – however impressive - won’t stop that.

The figures have come in, and it’s official: Turkish economy is still in a recession. This is despite rising budget deficits and public sector banks’ loans in the first quarter to fuel domestic demand and growth. I’m afraid it did not work as much as expected. Just an Indian summer maybe. No way for one-off measures at this stage. Loss of exchange rate stability has a very negative impact on consumer confidence. The country is still in a recession with two consecutive quarters of negative growth. You just wait for the second quarter of 2019, I presume.

On the other hand, GDP is no longer a good indicator of Turkish economic performance. To understand why, it’s worth taking a quick glance at those who are not working, the other cause of Turkey’s “misery.” Turkey’s labor force participation rate is still around 52 percent. This means that the country’s wellbeing depends on the performance of the working half of the population. The low level of female labor force participation and children are the main culprit here.

Here’s a little thought exercise for you: If you were to distribute the country’s entire economic gains to the working half of the population only, it would nearly triples the existing per capita GDP, raising it to the territory of $30,000. It would certainly make for happier voters.

This commentary was published in Hürriyet Daily News on 01.06.2019