The unemployment rate jumped to 12.3 per cent in October-December last year, official data showed on Monday, compared with a rate of 10.1 per cent in the same period in 2007, and was the highest level since the first quarter of 2004.
Consumer confidence ticked higher in January, separate data showed, but economists were unconvinced this signalled an immediate upturn in Turkey's economic fortunes.
"Unemployment is likely to increase further in the coming months to shoot above 15 per cent," said economist Levent Durusoy at Yatirim Invest.
The rate, measured on a three-month moving average, was 10.9 per cent in the September-November period of 2008.
Turkish manufacturers including auto factories and textile makers have slashed jobs and suspended production as exports plummet and domestic consumption falters.
Foreign Trade Minister Kursad Tuzmen said on Monday he expected Turkey's exports to shrink in the first half, but start recovering in the second half of 2009.
He said he expected improvement in trade balance with a rise in the use of intermediate goods made in Turkey due to a weaker lira currency, which makes imports more expensive to the benefit of domestic producers. The government is negotiating with the International Monetary Fund (IMF) on a loan deal which business and industry leaders say is essential to help Turkey weather the global slow-down, avert a potential balance of payments crisis and support markets.
Turkish Prime Minister Tayyip Erdogan told Reuters last week he wanted to secure a deal before local elections next month.
Most economists expect the Turkish economy to contract or grow only marginally in 2009.
Monday's jobless data showed that the non-farm jobless rate jumped to 15.4 percent in October-December 2008, versus 12.6 per cent in the same period in 2007.
Youth unemployment was especially high at 23.9 per cent between October and December, up from 20 per cent in the same period in 2007.
CONSUMER SENTIMENT SLIGHTLY UP
While jobless figures were grim, official data on Monday also showed consumer confidence edged slightly higher in January, as slowing inflation and a record interest-rate cut made people more optimistic.
The consumer confidence index rose 2.37 per cent to 71.56 points in January, boosted by a slight improvement in people's readiness to buy durable goods and in their view of the economy.
Economists, however, said consumer confidence fell to extremely low levels in late 2008 and a "correction" in consumer sentiment had to be expected.
"The rise in the consumer confidence index is quite small, showing a slight recovery in the sentiment. Such corrections are seen after extreme falls in indicators like it happens in the financial markets," said JP Morgan analyst Yarkin Cebeci.
The Turkish economy grew at its slowest pace in six years in the third-quarter of 2008, prompting the central bank to cut interest rates last month to a historic low of 13 percent in an attempt to shore up demand.
"Consumers see the central bank's interest-rate cuts as a positive signal, and it appears it will continue with (interest rate) reductions in the next couple of months," said Yelda Yucel, economist at Yapi Kredi Bank in Istanbul.