Medium Term Program (2014-2016) October 8, 2013
WORLD ECONOMY 2
Global Growth Forecasts (% change) 4.3 4.1 4.1 3.9 3.7 3.6 3.6 3.5 3.3 3.1 2.9 2.9 2.7 2013 2014 October 2012 Forecast October 2013 Forecast 3 Source: IMF World Economic Outlook Report
US Growth Forecasts (% change) 3.4 3.0 2.9 2.6 2.6 2.2 2.1 1.8 1.6 1.4 2013 2014 October 2012 Forecast October 2013 Forecast 4 Source: IMF World Economic Outlook Report
Eurozone Growth Forecasts (% change) 1.6 1.2 1.2 1.0 0.8 0.4 0.2 0.0 -0.4 -0.4 -0.8 2013 2014 October 2012 Forecast October 2013 Forecast 5 Source: IMF World Economic Outlook Report
Emerging Markets Growth Forecasts (% change) 6.0 5.9 5.6 5.5 5.1 5.0 4.5 4.5 4.0 2013 2014 October 2012 Forecast October 2013 Forecast 6 Source: IMF World Economic Outlook Report
Emerging Markets Growth Forecasts - excl. China (% change) 5.2 4.8 4.7 4.5 4.4 4.0 4.1 3.6 3.2 3.1 2.8 2013 2014 October 2012 Forecast October 2013 Forecast 7 Source: IMF World Economic Outlook Report
World Trade (% change) 6.2 5.8 5.6 5.0 4.9 4.5 4.4 3.8 3.2 2.9 2.6 2013 2014 October 2012 Forecast October 2013 Forecast 8 Source: IMF World Economic Outlook Report
Source: Bloomberg 1.0 1.5 2.0 2.5 3.0 3.5 US 10 Year Bond Yield (%) Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 9
Private Capital Flows to Emerging Economies (net, $ billion) 1,300 1,215 1,200 1,100 1,062 1,029 1,000 900 800 700 2012 2013* 2014* (*) Forecast 10 Source: IIF
Crude Oil (Brent, US Dollars per barrel) 150 120 90 60 30 2008-1 3 5 7 9 11 2009-1 3 5 7 9 11 2010-1 3 5 7 9 11 2011-1 3 5 7 9 11 2012-1 3 5 7 9 11 2013-1 3 5 7 9 2014 2015 2016 Source: Reuters 11 Note: 2014 and onwards reflect MTP assumptions.
MEDIUM TERM PROGRAM 12
Main Priorities of Medium Term Program Main Priorities of Medium Term Program; Reducing current account deficit, Increasing domestic savings Allocating existing resources to productive areas Increasing economic efficiency Decreasing inflation, Maintaining strong fiscal stance, Increasing growth and employment. 13
GDP Growth (% change) 6 5.0 5.0 5 4.0 4 3.6 3 2 1 2013 2014 2015 2016 14
Unemployment Rate (%) 9.6 9.5 9.4 9.4 9.2 9.2 9.0 8.9 8.8 2013 2014 2015 2016 15
Inflation Rate (%) 7 6.8 6 5.3 5 5.0 5.0 4 2013 2014 2015 2016 16
Current Account Deficit / GDP (%) 7.5 7.1 7.0 6.4 6.5 5.9 6.0 5.5 5.5 5.0 4.5 4.0 2013 2014 2015 2016 17
Public Sector Primary Balance (Program Defined) / GDP (%) 1.5 1.3 1.2 1.0 1.0 0.9 0.5 0.0 2013 2014 2015 2016 18
Central Government Budget Deficit / GDP (%) 2.5 2.2 Program 2.0 1.5 Forecast 1.0 1.9 1.6 1.2 1.1 0.5 0.0 2013 2014 2015 2016 19
EU Defined Public Debt / GDP (%) 37 35 33 33 31 30 29 25 2013 2014 2015 2016 20
Macroeconomic Policies and Structural Issues– I Monetary, financial sector, fiscal and incomes policies will be implemented in a coordinated manner. Achievements to date on the fiscal policy side will be maintained and the strong fiscal stance will be continued. Structural and macro prudential measures will be taken to support increase in domestic savings. To decrease the intensity of energy use in economy, efforts on energy efficiency will be continued. The use of domestic coal and renewable energy sources in electricity production will be given special importance, investing in nuclear power stations is to be continued without delaying and energy production based on domestic resources will be increased via rehabilitation of the power stations. Oil and natural gas exploration efforts at home and abroad are to be accelerated, exploration and production of domestic resources such as lignite coal and geothermal will be maximized. Large-scale exploration of shale gas and other new technologies will be conducted. 21
Macroeconomic Policies and Structural Issues– II Logistic centers will be established to meet the regional and global needs in important production and consumption areas and to support the competitiveness of country’s main export sectors. In order to facilitate the foreign trade and reach the export goals of the country, a large scale port capacity is to be built and railway and highway links of the ports will be completed. In tourism sector, a new structure, which improves quality of services, targets higher- income segments via diversified marketing channels and focus more on those tourism types that are in line with Turkey’s competitive advantages, will be established. Existing incentive policies are to be maintained actively to facilitate new investments especially in manufacturing industry, increase exports and technological development. By monitoring the outcomes of the policy implementation and sectoral developments, necessary revisions will be made in relevant fields of investment incentives system. The actions aiming at contributing to a more efficient and cost effective input supply in export oriented production, to decreasing the dependency of production and exports on imports of intermediate goods and thus to enhance the sustainable competitiveness of exports will be implemented within the framework of Input Supply Strategy (ISS). 22
Macroeconomic Policies and Structural Issues– III R&D based, innovative and high-value added production is to be supported. In this direction, R&D and innovation activities will be increased in private sector and commercialization and branding process of outputs to be obtained will be accelerated. Internationalization levels of SMEs will be increased by enhancing their capacities for R&D, innovation and export. SMEs will be promoted for branding, institutionalization, and development of innovative business models. For the allocation of public R&D spending, the priority will be given to channeling the private sector investments into the high trade deficit sectors. Domestic and foreign direct investments will be increased by improving the functioning of markets and competitive environment, protecting intellectual property rights, and creating a more attractive and predictable business and investment environment. Efforts for improving the business and investment environment will be oriented to common problem areas, and maintained in a more efficient and outcome-oriented manner. 23
Macroeconomic Policies and Structural Issues– IV Sufficient land creation will be facilitated in order to make appropriate land allocation to investors, an inventory of lands, especially of public lands, which are suitable for investment will be taken and the allocation processes will be improved. Approach for enhancing business and investment environment will be broadened and improved on a regional base and investors will be supported on a local base. In the education system, quality oriented transformation process which develops individual personality and skills, strengthens compliance with the labor market within the framework of a lifelong learning approach and is based on equality of opportunity will be continued. Individuals are up skilled with basic and vocational capabilities compatible with the demands of the labor market, professional and personal lives will be harmonized and active labor market policies on the basis of impact assessments will be implemented. Increasing labor force participation and employment rates will be continued, especially for women, youth and disabled people, by carrying out effective and integrated employment policies. 24
Macroeconomic Policies and Structural Issues– V Fight against informality will be effectively conducted. In this context, auditing capacity will be increased and activated, institutions’ implementation capacity and the IT infrastructure will be improved, fight against smuggling, inter-institutional coordination and data sharing will be enhanced, and public awareness will be increased. Efforts to make Istanbul an international financial center will be accelerated. Works aiming to develop the domestic bond market are to be continued. Financial education that contributes to the healthy functioning of financial markets, to conscious decision-making of individuals against a variety of financial products and to increase domestic savings will be widened. A regulation to resolve disputes in financial markets quickly and efficiently will be made and implementation will be strengthened. The access of SMEs and entrepreneurs to financial funds will be facilitated through improvement of the implementations in venture capital, business angels investments, credit guarantee fund and micro-credit facilities and of capital markets facilities. 25
SAVINGS – CREDITS – CURRENT ACCOUNT DEFICIT 26
Total Domestic Savings (% GDP) 20 19 18 17 16 15 14 13 12.6 12 11 10 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* (*) Estimate 27 Source: MoD
Saving Rates in Developing Countries (2013, % GDP) 49.7 50 45 40 35 33.1 32.4 32.3 30.2 28.8 30 23.8 25 23.3 21.6 20.2 20 17.7 16.2 13.4 15 12.6 10 5 0 Sources: MoD, IMF Database 28
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