MEDIUM TERM PROGRAM (2015-2017) October 8 th , 2014
WORLD ECONOMY 2
Global Growth Global growth rate is below pre-crisis levels. (%) 7 6 5.7 5.6 5.4 4.9 5 4.1 3.8 4 3.4 3.3 3.3 3.0 3 2 1 0.0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 F F Source: IMF World Economic Outlook Report October 2014 3
Advanced Economies Growth Contribution of the advanced economies to the global growth, which exhibited a slowdown aftermath of the global crisis, has been rising. (%) 4 3.1 3.1 2.8 2.8 3 2.3 1.8 2 1.7 1.4 1.2 1 0.1 0 -1 -2 -3 -3.4 -4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 F F Source: IMF World Economic Outlook Report October 2014 4
Emerging Market and Developing Economies Growth The growth of emerging market and developing economies which acted as the locomotive for the world economy in post-crisis period, demonstrates a slowdown in recent years. (%) 9 8.6 8.2 8 7.5 7.3 7 6.2 5.8 6 5.1 5.0 4.7 5 4.4 4 3.1 3 2 1 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 F F Source: IMF World Economic Outlook Report October 2014 5
The Growth of World Trade Volume The growth of the world trade volume has been weaker than pre-crisis levels. (%) 15 12.6 12 9.2 8.1 9 7.6 6.7 6 5.0 3.8 3.0 3.0 2.9 3 0 -3 -6 -9 -10.6 -12 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 F F Source: IMF World Economic Outlook Report October 2014 6
U.S. and Euro Area Economic Outlook While U.S. Economy is recovering, Eurozone faces risk of deflation with weaker growth and higher unemployment rates. Euro Area Growth (%) U.S. Growth (%) 4 3.3 3.0 4 3.3 3.1 3 2.0 2.7 1.7 2.5 3 1.6 2.3 1.3 2 2.2 2.2 0.8 1.8 1.6 0.4 2 1 0 1 -1 -0.7 -0.4 0 -2 -0.3 -1 -3 -4 -2 -4.5 -2.8 -5 -3 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 F F F F Unemployment Rates Inflation Rates (%) (%) 6 14 11.5 5 12 4 3 10 1.7 2 8 0.3 1 5.9 0 6 -1 4 -2 -3 2 2005-1 7 2006-1 7 2007-1 7 2008-1 7 2009-1 7 2010-1 7 2011-1 7 2012-1 7 2013-1 7 2014-1 7 2005-1 7 2006-1 7 2007-1 7 2008-1 7 2009-1 7 2010-1 7 2011-1 7 2012-1 7 2013-1 7 2014-1 7 U.S. Euro Area U.S. Euro Area 7 Source: BLS, Eurostat, IMF World Economic Outlook October 2014
Moderate recovery in U.S. economy is expected to continue in the next period. In line with the economic recovery, the Central Bank of the U.S. (FED) is expected to finalize the asset purchase program by October 2014 meeting, after the tapering initiated in January 2014. Federal Reserve is expected to increase policy rate by mid 2015. Measures are taken to revive demand in the Euro Area. European Central Bank (ECB) decided to continue quantitative easing to support economic recovery and to eliminate deflation risk. Developments taking place in the Euro Area, the major trade partner of Turkey, effects Turkish economy through the trade, investment and finance channels . 8
MEDIUM TERM PROGRAM 9
Medium Term Program Priorities Continuing to fight against inflation decisively, Reducing current account deficit, Increasing potential growth by accelerating structural reforms. 10
Medium Term Program Policies In order to reduce current account deficit and support monetary policy aiming to decrease inflation; fiscal policy will continue to maintain its tight stance. Structural reforms are going to be accelerated for the purpose of strengthening macroeconomic stability and decreasing current account deficit to sustainable levels. 11
MEDIUM TERM PROGRAM 2015-2017 MAIN MACROECONOMIC AGGREGATES 12
GDP Growth (%) 6.0 5.0 5.0 5.0 4.0 4.0 3.3 3.0 2.0 1.0 0.0 2014 F 2015 P 2016 P 2017 P F: Forecast P: Program 13
Current Account Deficit / GDP (%) 6.0 5.7 5.7 5.4 5.4 5.4 5.2 5.1 4.8 4.5 2014 F 2015 P 2016 P 2017 P F: Forecast P: Program 14
Total Domestic Savings (% GDP) 18 17.1 17 16.2 16 15.2 15 14.5 14.4 14.9 14 13.5 13.2 13.4 13 2009 2010 2011 2012 2013 2014 F 2015 P 2016 P 2017 P F: Forecast P: Program 15
Unemployment Rate (%) 9.8 9.6 9.6 9.5 9.4 9.2 9.2 9.1 9.0 2014 F 2015 P 2016 P 2017 P F: Forecast P: Program 16
Inflation Rate (%) 10.0 9.4 9.0 8.0 7.0 6.3 6.0 5.0 5.0 5.0 4.0 2014 F 2015 P 2016 P 2017 P F: Forecast P: Program 17
Public Sector Primary Balance / GDP (%) (Program Defined) 2.0 1.8 1.5 1.5 1.2 1.0 0.5 0.4 0.0 2014 F 2015 P 2016 P 2017 P F: Forecast P: Program 18
Central Government Budget Deficit / GDP (%) 1.5 1.4 1.1 1.0 0.7 0.5 0.3 0.0 2014 F 2015 P 2016 P 2017 P F: Forecast P: Program 19
EU Defined Public Debt / GDP (%) 35 33.1 33 31.8 31 30.0 29 28.5 27 25 2014 F 2015 P 2016 P 2017 P F: Forecast P: Program 20
Structural Reform Agenda Medium Term Program (2015-2017) covers the period in which structural reforms in Tenth Development Plan are going to be implemented. Tenth Development Plan targets stable and high growth rates by providing the transformation of economy towards innovative production structure. 21
Growth Strategy Macroeconomic Human Capital Technology and Physical Institutional Stability and Labor Market Innovation Infrastructure Quality A competitive, export oriented, and private sector- led production structure will be promoted via advances in productivity and industrialization. HIGH AND STABLE GROWTH 22
Primary Transformation Programs in the Tenth Development Plan Productivity Growth in Production 14. Energy Efficiency Improvement 1. Reducing Dependence on Imports 15. Effective Use of Water in Agriculture 2. Increasing Domestic Savings at the National 16. Structural Transformation in Healthcare 3. Level and Preventing Wastefulness Industries Istanbul International Financial Center 17. Improvement in Health Tourism 4. Rationalization of Public Expenditures 18. Transition from Transportation to Logistics 5. Raising the Quality of Public Revenue 19. Development of Basic and Occupational Skills 6. Improving the Business and Investment Climate 20. Attracting Qualified Human Resources from 7. Abroad Improving the Effectiveness of the Labor 8. Market 21. Healthy Life and Mobility Reducing the Informal Economy 22. Preserving the Family and Dynamic Population 9. Structure 10. Development of the Statistical Information Infrastructure 23. Institutional Capacity Development at the Local Level 11. Commercialization of Priority Technology Areas 24. Urban Redevelopment Program to Increase 12. Technology Development and Local Production Competitiveness and Social Cohesion through Better Public Procurement 25. Improving International Cooperation 13. Energy Generation Based on Local Resources Infrastructure for Development 23
TABLES 24
GDP and Inflation 2013 2014 2015 2016 2017 GDP Growth (%) 4.1 3.3 4.0 5.0 5.0 GDP (Billion TL) 1,565 1,764 1,945 2,150 2,370 GDP per Capita ($) 10,807 10,537 10,936 11,541 12,229 CPI (end year, % change) 7.4 9.4 6.3 5.0 5.0 25
Balance of Payments ($ billion) 2013 2014 2015 2016 2017 Export (Fob) 151.8 160.5 173.0 187.4 203.4 Import (Cif) 251.7 244.0 258.0 276.8 297.5 Foreign Trade Balance -99.9 -83.5 -85.0 -89.4 -94.1 Tourism Receipts 28.0 29.5 31.5 33.5 35.5 Current Account Balance -65.1 -46.0 -46.0 -49.2 -50.7 Current Account Balance (% GDP) -7.9 -5.7 -5.4 -5.4 -5.2 26
Labor Market 2013 2014 2015 2016 2017 Employment (thousand) 24,601 25,824 26,340 27,002 27,599 Non-Farm Employment (thousand) 19,397 20,335 20,958 21,741 22,493 Employment Rate (%) 43.9 45.3 45.4 45.7 45.9 Labor Force Participation Rate (%) 48.3 50.1 50.2 50.3 50.5 Unemployment Rate (%) 9.0 9.6 9.5 9.2 9.1 27
Central Government Budget (billion TL) 2013 2014 2015 2016 2017 Total Expenditures 408.2 448.4 472.9 507.6 542.3 Primary Expenditures 358.2 398.2 418.9 453.6 487.3 Interest Payments 50.0 50.2 54.0 54.0 55.0 Total Revenues 389.7 424.0 452.0 491.0 534.2 Tax Revenues 326.2 351.6 389.5 427.9 468.5 Non-Tax Revenues 63.5 72.4 62.5 63.2 65.7 Budget Balance -18.5 -24.4 -21.0 -16.5 -8.0 28
Public Finance (% of GDP) 2013 2014 2015 2016 2017 Public Sector Balance -0.5 -1.0 -0.5 -0.2 0.1 Central Government Budget -1.2 -1.4 -1.1 -0.8 -0.3 Rest of the Public Sector 0.7 0.4 0.6 0.6 0.4 Public Sector Primary Balance(*) 1.1 0.4 1.2 1.5 1.8 Central Government Budget 0.9 0.5 1.1 1.3 1.6 Rest of the Public Sector 0.2 -0.1 0.1 0.2 0.1 (*) Program Defined 29
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