VKF_FRAE_2018_uyg11

VakıfBank Annual Report 2018 33 The unemployment rate was increased. After dropping in the first two quarters of the year, unemployment rate rose in the third quarter, hitting 11.6% in October due to increasing in foreign exchange rate and interest rates, as well as the marked slowdown in economic activity. Despite the economic stabilization that started in fourth quarter, domestic demand remained weak. This was reflected clearly in service sector employment figures. Contraction in the construction sector due to cost-side pressures had a negative impact on employment in this key industry as well. The unemployment rate is expected to decline in the second half of 2019 as the economy continues to rebound. The central government’s gross debt stock has increased due to the jump in foreign debt. The central government’s gross debt stock, which stood at TL 876.5 billion in 2017, climbed to TL 1.1 trillion in 2018. Some TL 586.1 billion of the debt stock is TL denominated, while the remaining TL 480.6 billion is foreign currency denominated. In line with Maastricht Criteria, also called the Fiscal Rule of the EU, Turkey’s ratio of debt stock to GDP stands below the 60% mark and is expected to remain below this level in the coming year. In 2018, Turkey’s current account balance recorded a surplus for the first time in three years. In May 2018, the annual current account deficit climbed to USD 58.2 billion, its highest level since April 2014. Subsequently, the current account gap narrowed with the introduction of economic stabilization measures. In August, the current account balance recorded a surplus for the first time in three years. As the current account balance showed a surplus for four consecutive months, the 12-month cumulative current account deficit decreased to USD 33.9 billion in November. The current account gap is expected to decline in December with the current account deficit/ GDP ratio closing 2018 at 3.5%. The narrowing in the current account deficit is forecast to continue in 2019.