At the beginning of the week the press featured a statement by Honorable Prime Minister. The statement said that unemployment rate which stood at 14.5 percent in January and 14.4 percent in February might decrease to 10 percent in summer. Is this possible?

It is the end of May now. It is evident that even if a comprehensive economic policy package aimed to decrease unemployment rate is introduced immediately, it cannot influence the unemployment rate in this summer. Then, there are two factors that can reduce unemployment rate: seasonal factors and the recently observed trend of recovery.

Let us first take a look at the seasonal factors. Table 1 shows the unemployment rates in January, February and in the period between May and August since 2005. The third row shows the January-February average unemployment for all years examined. The main point I want to underline is the "deviation from January-February average" raw. It shows the deviations in unemployment rate in summer compared to January-February average.

It is seen that in summer unemployment rate in Turkey is significantly lower than the January-February average. This applies for all years since 2005. The average deviations in each month that is not involved in the table are as follows: In the 2005-2009 period, unemployment rate in May and June at each year stood 2.5 points below the January-February average for that year. The difference is 2.4 percent for July and 2.1 percent for August.

January-February average unemployment rate in 2010 was 14.45 percent. In that case, it would not be surprising if the rate decreases to 12 percent in the May-August period solely due to seasonal factors. We do not need an additional measure to reduce the unemployment rate or a solider level of economic activity.

Now let us take a look at the recent rise in the level of economic activities. There are three reasons underlying this favorable development: The upwards tendency in the volume of credits net of inflation since mid-2009, the apparent increase in exports, the improvement in the confidence in the economy and the resultant realization of deferred consumption. Under normal circumstances the impact of these factors would be expected to prevail in summer, as well. Therefore, we could have expected that unemployment rate would decrease further to 11 percent if not to 10 percent.

Nevertheless, we evidently are not under normal circumstances. The crisis in the European Union intensifies with an increasing pace. In that case, it is a considerable risk that banks will start to refrain from extending credits in the near future. The uncertainties about to which extend the crisis will intensify on the one hand and the further tightening of fiscal policies in the EU to reduce the risk of a crisis will decrease the demand for Turkey's exports. What is more, Euro has been depreciating. These are unfavorable developments considering Turkey's export performance. In such a milieu, increase in the domestic demand will also be expected to slow down. Then, we must not be expecting an additional decrease in unemployment rate in May-August period apart from that to be ensured by seasonal factors.

So, will the reduction ensured in summer due to seasonal factors be permanent? The answer is clear: "Easy come, easy go". In the 2005-2009 period, unemployment rate have always tended upwards in the last two months of the year. What is more, if the above mentioned possibility realizes, that is, if the crisis in the EU deepens, unemployment rate will increase despite the impact of the seasonal factors. Bitter as it is, this is a possibility.