Turkey GNP Falls

There has been a sharp decline in economic activity in Turkey as a result of the country's financial crisis.

The financial crises began when Prime Minister Bulent Ecevit clashed with President Ahmet Necdet Sezer over reform. The president said Ecevit was not moving fast enough to combat corruption in the banking system.

The gross national product (GNP) in the first quarter of the year was down by 4.2% compared with the same period last year.

The financial crisis has led to hundreds of thousands of jobs being lost and has slashed the value of the Turkish currency, the lire, by almost 40% against the dollar. Prices on imports like gasoline, cars, electronics, computers, etc, have risen as much as 50 percent. That has repercussions on domestic prices as well.

Because of the declining living standards and rising unemployment as a result of the crisis, protests are being held. Unions are also protesting a government plan to freeze salaries for over 400,000 state workers for six months as part of the austerity plan mandated by the International Monetary Fund (IMF).

To help the economy, the government has offered to roll back interest rates for small business owners and allow them to delay tax payments. In addition, Turkey has budgeted for a 3% contraction in GNP for the whole of 2001 after agreeing a new multi-billion dollar loan with the IMF.