MEDIUM TERM PROGRAM (2016-2018) January 11 th , 2016
WORLD ECONOMY 2 2
Global Growth (%) Global growth in the post-crisis period is lower compared to pre-crisis period. 5 4.7 4 3.8 3.2 3 2 2002-2007 2008-2015 2016-2018 Average Average Average Source: IMF World Economic Outlook Report 3
Contribution to Global Growth (% points) While emerging economies made high contribution to global growth in the post crisis period, advanced economies have accelerated most recently. 5 4 3.3 3 2.8 2 2.8 1 1.4 0.9 0.4 0 2002-2007 2008-2015 2016-2018 Average Average Average Advanced Economies Emerging Market Economies Source: IMF World Economic Outlook Report, Treasury Calculations 4
US and Euro Area Outlook While US economy is recovering, Euro Area growth is on a moderate pace. Euro Area Growth US Growth (%) (%) 5 5 4 3.2 3.0 4 3.3 3 2.4 2.6 2.8 2.8 2.7 2.0 1.6 2.7 2.5 1.7 0.9 1.5 1.6 1.7 1.6 3 2.2 2 1.8 1.6 1.5 0.5 2 1 0 1 -1 -0.8 -0.3 0 -2 -0.3 -1 -3 -2 -4 -4.6 -2.8 -5 -3 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F Unemployment Rate Inflation Rate (%) (%) 6 14 5 12 4 10 3 8 2 6 1 0 4 -1 2 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F US Euro Area US Euro Area 5 5 Source: IMF World Economic Outlook Report
Global Economic Agenda for the Near Future Slowdown in Developing Countries and Weak World Trade Volume Low Commodity Prices and Weak Demand in Commodity Exporting Countries Divergence in Advanced Country Monetary Policies Slowdown in Capital Flows towards Developing Countries Geopolitical Tensions and Political Uncertainties 6 6
Emerging Markets Economic Growth (Excl. China and India) (%) The weak trend in emerging market economies will continue in the near future. 6 5.7 5 4 3.5 3.4 3 2 2002-2007 2008-2015 2016-2018 Average Average Average Source: IMF World Economic Outlook Report, Treasury Calculations 7
World Trade Volume Growth (%) Growth of world trade volume decelerated after the global crisis. 9 8 7.5 7 6 5 4.4 4 2.9 3 2 2002-2007 2008-2015 2016-2018 Average Average Average Source: IMF World Economic Outlook Report 8 8
Brent Oil Price per Barrel (US Dollar) 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 11 2014-1 3 5 7 9 11 2015-1 3 5 7 9 11 2016 2017 2018 Source: Reuters 9 Note: MTP estimation for 2016 and after.
Source: IMF Low Commodity Prices (Index 2005=100) 110 130 150 170 190 210 230 250 270 70 90 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 Energy Food Metal Commodity May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 10 Sep-15
Advanced Country Policy Interest Rates* (%) 6 5 4 3 2 1 0 2007-Q1 Q3 2008-Q1 Q3 2009-Q1 Q3 2010-Q1 Q3 2011-Q1 Q3 2012-Q1 Q3 2013-Q1 Q3 2014-Q1 Q3 2015-Q1 Q3 2016-Q1 Q3 2017-Q1 USA Euro Area Japan (*) Dashed lines represent Bloomberg forecasts. 11 Source: Bloomberg
Private Capital Flows Towards Emerging Markets (net, $ billion) 561 558 600 440 407 400 319 301 238 222 189 200 127 125 75 66 32 8 0 -200 -306 -400 -540 -600 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 F F 12 Source: IIF
MEDIUM TERM PROGRAM 13 13
Main Objectives of Medium Term Program Increasing stable and inclusive growth Reducing inflation Preserving decreasing trend in the current account deficit Increasing competitiveness, employment and productivity Improving quality of the fiscal discipline and strengthening public finance 14 14
Growth Strategy in the Program Period Improving human capital Improving efficiency in labor market Increasing technological development and innovation capacity Strengthening infrastructure Enhancing institutional quality 15 15
MEDIUM TERM PROGRAM 2016-2018 MAIN MACROECONOMIC AGGREGATES 16 16
GDP Growth (%) 6 5.0 5.0 5 4.5 4.0 4 2.9 3 2 2014 2015 F 2016 P 2017 P 2018 P F: Forecast P: Program 17 17
Current Account Deficit (% of GDP) 7 5.8 6 5 4.4 3.9 4 3.7 3.5 3 2 1 2014 2015 F 2016 P 2017 P 2018 P F: Forecast P: Program 18 18
Total Domestic Savings (% of GDP) 17.8 18 17.2 17 16.5 16 15.6 15.0 15 14 2014 2015 F 2016 P 2017 P 2018 P F: Forecast P: Program 19 19
Unemployment Rate (%) 10.6 10.2 10.2 10.2 9.9 9.9 9.8 9.6 9.4 2014 2015 F 2016 P 2017 P 2018 P F: Forecast P: Program 20 20
Inflation Rate (%) 10 8.8 9 8.2 8 7.5 7 6.0 6 5 5.0 4 2014 2015 2016 P 2017 P 2018 P P: Program 21 21
Central Government Budget Deficit (% of GDP) 1.6 1.4 1.3 1.3 1.2 1.2 1.0 1.0 0.8 0.8 0.6 2014 2015 F 2016 P 2017 P 2018 P F: Forecast P: Program 22
Central Government Primary Balance (Program Defined) (% of GDP) 1.2 1.0 0.8 0.5 0.5 0.4 0.4 0.1 0.0 2014 2015 F 2016 P 2017 P 2018 P F: Forecast P: Program 23
Public Sector Borrowing Requirement (% of GDP) 0.7 0.6 0.6 0.5 0.4 0.3 0.3 0.3 0.3 0.2 0.1 0.0 0.0 2014 2015 F 2016 P 2017 P 2018 P F: Forecast P: Program 24
Public Sector Primary Balance (% of GDP) (Program Defined) 1.5 1.3 1.1 1.0 0.8 0.6 0.6 0.5 0.0 2014 2015 F 2016 P 2017 P 2018 P F: Forecast P: Program 25
EU Defined Public Debt (% of GDP) 35 33.5 33 32.6 31.7 31 30.5 29.5 29 27 2014 2015 F 2016 P 2017 P 2018 P F: Forecast P: Program 26 26
Structural Reforms Implementation of 25 Priority Transformation Program which was previously disclosed to the public, will be effectively conducted according to the disclosed schedule. Preparation and completion of regulations will be accelerated within the implementation period of 1,248 actions in the Priority Transformation Programs. Action Plan for 2016 covering structural reforms and actions was released on the 10 th December 2015 which is prepared within the context of 64 th Government Program. 27 27
Turkey’s Reform Program Sectoral Structural Reforms Transformation (Macro) (Micro Reforms) EU Accession Process 28 28
25 Priority Transformation Programs (The 10 th Development Plan) Tech. Develop’t Commercialization Domestic and Dom. Prod’n Reducing Import Energy Efficiency in Priority Resource Based Dependency through Public Improvement Technology Areas Energy Production Procurement Enhancing Healthcare Transformation Enhancing Efficiency of Related Industries Health Tourism from Productivity In Water Use in Structural Improvement Transportation to Manufacturing Agriculture Transformation Logistics Increasing Business and Istanbul Rationalization of Public Revenue Domestic Savings Investment International Public Quality and Avoiding Climate Financial Center Expenditures Enhancement Waste Improvement Family and Basic and Statistical Dynamic Improving Labor Reducing Informal Occupational Infrastructure Population Market Economy Skills Development Structure Effectiveness Development Conservation Competitiveness Improving the Institutional Attracting and Social Infrastructure of Healthy Life and Capacity Qualified Human Cohesion International Mobility Improvement at Enhancing Urban Cooperation for Resources Local Regeneration Development 29
2016 Action Plan Action Plan is composed of reforms and actions to be completed in 3-month, 6-month and 1-year periods. Main objectives of the structural reform agenda within the framework of 2016 Action Plan are as follows: Reaching a high income level with strong and sustainable growth ‘Inclusive Growth’ which will enable all parts of the society to benefit from the strong and sustainable growth 30 30
Labor Market Reforms Private Severance Part-time & Employment Pay Flex-Work Agencies Attracting Global Talent On-the-Job Training (Turquoise Card) 31
Enhancing Investment Climate New Patent Law and Reducing Red Tape R&D Supports Incentives for Medium Specialized Courts and High-Tech Production 32
Reforming Judicial System Increasing the Specialization in Expert Witness effectiveness of Judiciary Mechanism labor court Increasing the Putting Arbitration effectiveness of Restructuring Centers into intermediate court Notary System operation of appeal 33
Enhancing Transparency & Combatting Corruption Public Procurement Political Ethics Law Law Transparency of the Rule-Based Zoning finance of politics Regulations 34
Public Finance Reform Income Tax Law Tax Procedures Code Performance Based Expenditure Reform Budgeting 35
Public Administration Reform Productivity, Public Personnel Accountability & Reform Transparency Quality of Public e-State Service 36
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