VZCZCXRO4381
RR RUEHDA
DE RUEHAK #1653/01 0871415
ZNR UUUUU ZZH
R 281415Z MAR 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 4357
INFO RUEHIT/AMCONSUL ISTANBUL 0181
RUEHDA/AMCONSUL ADANA 0575
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 ANKARA 001653 
 
SIPDIS 
 
TREASURY FOR PLANTIER 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID SOCI PHUM TU
SUBJECT: INCOME INEQUALITY DECREASING IN TURKEY, BUT 
RURAL POVERTY INCREASING 
 
REF: 05 ANKARA 7513 
 
¶1. (SBU) Summary: According to updated data for 2004, 
the share of the population living in poverty in Turkey 
decreased from 28.12 percent to 25.6 percent.  The data 
also shows a growing city/countryside divide as urban 
poverty declines and rural poverty increases.  Contrary 
to widespread perception, the income gap between 
Turkey's poorest and the richest has narrowed during 
the recovery from the 2001 economic crisis, leading to 
a growing middle class. Over the past 20 years, the 
data shows a striking reduction in income inequality. 
End Summary. 
 
--------------------------------------------- --------- 
Overall Poverty Rate Drops; Purchasing Power Increases 
--------------------------------------------- --------- 
 
¶2. (SBU) A recently released Turkish Statistical 
Institute (TUIK) official study, based on the results 
of a 2004 Household Budget Survey, reported that the 
incidence of poverty declined from a peak of 28.1 
percent in 203 to 25.6 percent in 2004.  TUIK defined 
poverty as monthly income under 429 million old Turkish 
Lira (about $318) for a family of four.  On a 
purchasing power-adjusted basis, the number of people 
living on $4.3 or less per day also fell, from 23.8 
percent to 20.9 percent. By a measure of more extreme 
poverty, however, the percentage of the population 
living on less than $2.15 per day increased slightly to 
2.5 percent. 
 
----------------------------- 
Growing Urban-Rural Divide... 
----------------------------- 
 
¶3. (SBU) Despite an overall drop in poverty throughout 
Turkey in 2004, the gap between the urban and rural 
poverty rates (which includes both food and non-food 
expenditures) continued to increase.  According to TUIK 
statistics, the percentage of the urban population 
living in poverty fell by six percentage points to 16.6 
percent, while the rate in rural areas increased to 
nearly 40 percent.  The urban population below the 
poverty line fell from 9.4 million to 7.1 million while 
the rural population below the poverty line grew from 
10.1 million to 10.8 million. 
 
          % of Population Below Poverty Line 
          ----------------------------------- 
             2003 2004 
             ----                ---- 
Turkey       28.1                25.6 
 
Urban        22.3                16.6 
 
Rural        37.1                40.0 
 
¶4. (SBU) The gap in education levels continues to be 
the driving factor in income inequality.  In 2004, the 
poverty rate among the unemployed was 27.4 percent, 
while the rate for those formally employed was 10.4 
percent.  According to the TUIK report, the poverty 
rate among university graduates was 1.3 percent, while 
45.1 percent of the illiterate population fell under 
the poverty line.  Morgan Stanley reports that the 
lowest quintile of households accounts for 1.2 percent 
of spending on education, whereas the highest quintile 
accounts for 69.1 percent. 
 
----------------------------- 
...and a Growing Middle Class 
----------------------------- 
 
¶5. (SBU) Although the divide between the poverty rate 
among the urban and rural populations grew in 2004, 
Turkey's Gini coefficient (an indicator of the degree 
of income inequality) improved from 0.49 in 1994 to 
0.42 in 2003 and 0.40 in 2004.  (The Gini coefficient 
is a number between 0 and 1.  Zero corresponds to 
perfect equality, with everyone having the same income, 
and 1 corresponds to perfect inequality, with one 
person having all of the income.  As a means of 
comparison, according to the 2005 United Nations Human 
Development Report, the US has a Gini coefficient of 
0.41, while France's is 0.33 and Brazil's is 0.59.) 
Although there is still a vast gap between the incomes 
 
 
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