Republic of Turkey Undersecretariat of Treasury TURKISH ECONOMY April 2013
Macroeconomic Performance (2009 - 2011) GDP Growth (%) Growth in Total Domestic Demand (%) 10 9.2 8.8 25 8 20 15 6 10 4 5 0 2 -5 0 -10 -2 -15 -20 -4 -25 -4.8 2009-Q1 Q2 Q3 Q4 2010Q1 Q2 Q3 Q4 2011Q1 Q2 Q3 Q4 -6 2009 2010 2011 2 Source: TURKSTAT, CBRT, BRSA
Rebalancing in 2012 Credit Growth (fx adjusted, annual % change) 35 30 25 20 15 10 2011-1 2 3 4 5 6 7 8 9 10 11 12 2012-1 2 3 4 5 6 7 8 9 10 11 12 Current Account Deficit/ GDP (2012, %) 10.0 8.0 8.0 7.3 6.0 6.0 4.0 2.0 0.0 Program proj. Revised est. Outturn 3 Source: TURKSTAT, CBRT, BRSA
Strong Employment Performance Continued in 2012 Change in the Unemployment Rate Unemployment Rate and Total Employment (between 2012 Q3 and 2009 Q3, % points) Turkey Youth Unemployment Rate (*) Total Change in Employment (thousand people) (seasonally adjusted, ages 15-24, %) 60 50 40 Euro Area (average) 30 20 16.2 10 0 Czech… United… Greece** Spain Croatia Portugal Italy Slovakia Latvia*** Ireland Hungary** Poland Bulgaria Cyprus*** France Sweden Lithuania Slovenia*** Romania*** Belgium Finland Luxembourg Estonia** Malta Turkey*** Denmark Netherlands Austria Norway*** Germany (*) November 2012 (**) October 2012 4 (***) September 2012 Source: EUROSTAT. Source: TURKSTAT, International Labor Organization (ILO)
Fiscal Policy and Public Debt in 2012 General Government Overall Deficit Central Government Budget Deficit / GDP (%) (excl. privatization, % GDP) 2,6 2,0 2,4 2,3 1,8 2,2 1,7 1,7 2.0 2,0 1,6 1,8 1,4 1,6 1,5 1,4 1,4 1,2 1,2 1,0 1,0 Target Revised est. Outturn Target Revised est. Outturn* (*) Provisional 5 Source: Undersecretariat of Treasury, MoF, MoD, TURKSTAT
Medium Term Program (2013-2015) GDP Growth Rate (%) Unemployment Rate (%) Inflation Rate (%) Current Account Deficit / GDP (%) 6 Source: MoD, 2013-2015 Medium Term Program
Fiscal Policy and Public Debt (2013-2015) General Government Overall Deficit Central Government Budget Deficit / GDP (%) (excl. privatization, % GDP) 2.5 2.5 2.1 2.2 2.0 1.8 2.0 2.0 1.4 1.8 1.5 1.0 1.5 0.5 1.0 0.0 2013 2014 2015 2013 2014 2015 IMF Defined Public Sector Primary Balance (% GDP) EU Defined General Gov't Gross Debt Stock (% GDP) 1.0 35.0 35 0.8 0.7 33.0 0.6 31.0 0.6 0.5 30 0.4 0.2 25 2013 2014 2015 2013 2014 2015 7 Source: MoD, 2013-2015 Medium Term Program
Key Factors Supporting Macroeconomic Stability and Strong Growth Prospects Structural Measures to Address Challenges in External Balance Sound Public Finance and Debt Structure Strong Banking Sector Low Level of Household Indebtness Domestic and External Confidence Favorable Demographics Improved Social Inclusion 8
Structural Measures to Address Challenges in External Balance Increasing private savings New incentive structure for Private Pension System Reducing Import-Dependency on Energy Renewable Energy, utilizing huge domestic lignite potential, energy efficiency, nuclear energy Diversification of Export Markets and Products Increasing Competitiveness New Investment Incentive System R&D and Innovation Support Programs Labor Market Reforms Improving the Quality of Financing New Capital Markets Law Tax support to Venture Capital Funds, Business Angels, Equity Investment Funds, portfolio investment companies established in Turkey Lower withholding tax rate on long term deposits Legislation on lease certificate issuance Istanbul Finance Center Project 9
Private Pension System Number of Participants (million) 10 Source : Pension Monitoring Center
Export Markets Diversification (% of total exports) 60 EU 50 40 30 Africa and Middle East 20 10 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 11 Source: TURKSTAT
Export Products Diversification (% of total exports) 12 Source: TURKSTAT
Change in General Government Debt Stock and Budget Balance between 2007 and 2012 105 Ireland 90 75 Debt Stock (% GDP) 60 Japan Portugal Greece Spain United Kingdom 45 United States 30 France Romania Italy Canada Australia Poland 15 South Africa Germany Czech Rep. China Brazil Korea Russia Mexico 0 Turkey India Saudi Arabia -15 Indonesia Argentina -30 -14 -12 -10 -8 -6 -4 -2 0 2 Budget Balance (% GDP) Source: IMF, Fiscal Monitor April 2013 13
Fiscal Policy and Public Debt (*) Provisional 14 Source: Undersecretariat of Treasury, MoF, MoD, TURKSTAT
Key Public Debt Indicators Interest Composition of Central Government Currency Composition of Central Government Gross Debt Gross Debt (%) (%) 100 100 26.7 27.1 27.3 29.1 29.6 31.3 33.8 40.2 40.5 40.8 37.6 37.2 43.0 44.4 44.0 46.2 46.0 46.6 41.5 49.8 75 51.1 46.3 75 58.1 50 50 73.3 72.7 72.9 70.9 70.4 68.7 59.8 59.5 59.2 66.2 57.0 56.0 55.8 62.4 62.8 53.8 54.0 53.4 50.2 58.5 25 48.9 53.7 25 41.9 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Feb Feb TL Foreign Exch. Fixed Floating Average Maturity of Domestic Borrowing (months) International Bond Issuances (billion USD) 80 70.3 70 60.8 60 50 44.7 44.1 40 35.3 34.0 31.7 27.7 30 28.0 20 14.8 11.6 9.4 10 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Apr 15 Source: Undersecretariat of Treasury
Banking and Household Sector Indicators Banking Sector: Capital Adequacy Ratio in Selected Capital Adequacy Ratio (%) Emerging Markets (%, 2012*) 20 18.1 17.9 17.6 17.3 16.7 16.3 16.0 15.9 15.7 35 30.9 16 14.8 14.6 14.1 13.7 13.6 13.3 12.9 28.2 30 25.1 23.7 25 21.9 12 20.6 18.9 19.0 18.0 20 17.9 17.6 16.8 16.5 8 15 10 4 Colombia Turkey Malaysia Indonesia Brazil Thailand Mexico Hungary Republic Poland Romania Korea Russia India Chile China 5 Czech 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012-02 2013-02 (*) CAR values for Czech Rep., Korea and India are as of 2012Q3 and China is as of 2012Q2. Household Liabilities (% of GDP) Asset Quality (NPL Ratio, %) Euro Area 2006-10 Average 24 65 21.2 20 55 16 45 11.5 12 35 7.6 8 6.0 25 5.3 21 4.7 19 3.7 3.7 3.7 17 3.5 2.7 15 4 3.0 14 2.9 1.5 12 15 0.8 10 0.8 0.9 0.6 0.5 0.4 0.6 0.7 0.6 0.7 0 5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-02 2006 2007 2008 2009 2010 2011 2012 Gross Net 16 Source: BRSA, IMF-FSI
100 110 120 130 Real Sector and Consumer Confidence 50 60 70 80 90 Source: CBRT, TURKSTAT. (*) Seasonally adjusted. Jan-2007 Apr-2007 Jul-2007 Oct-2007 Jan-2008 Apr-2008 Jul-2008 Oct-2008 Jan-2009 Apr-2009 Jul-2009 Oct-2009 Jan-2010 Apr-2010 Jul-2010 Oct-2010 Consumer Confidence Index Jan-2011 Real Sector Confidence Index* Apr-2011 Jul-2011 (RHS) (LHS) Oct-2011 Jan-2012 Apr-2012 Jul-2012 Oct-2012 Jan-2013 17 50 55 60 65 70 75 80 85 90
11 13 15 17 19 21 23 25 5 7 9 TL Benchmark Bond Yield (%) Jan-07 Source: Bloomberg. Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 18 Jan-13 Apr-13
CDS Spreads (*) (5 year, $ denominated, basis points) 350 300 250 200 150 100 Jan-12 Apr-12 May-12 Jun-12 Jul-12 Oct-12 Jan-13 Apr-13 Feb-12 Mar-12 Aug-12 Sep-12 Nov-12 Dec-12 Feb-13 Mar-13 19 Source: Bloomberg.
Turkey’s Credit Rating (2009 -2013) Ba1 BB+ /Stable /Positive Ba1 (27.03.2013) BB (20.06.2012) /Positive /Stable (01.05.2012) (05.10.2010) Ba2 /Stable BB /Positive (08.01.2010) (19.02.2010 ) Ba3 BB- /Positive /Stable (18.09.2009) (17.09.2010) Moody’s S&P BBB- /Stable BB+ /Stable (05.10.2012) (24.11.2011) BB+ /Positive (24.11.2010) BB+ /Stable Investment Grade (03.12.2009) BB- /Positive (27.09.2009) 20 Fitch
Labor and Capital Stock Indicators Demographic Projections (Working Age Population*, 2011=100) Total Dependency Ratio (*) 125 100 Turkey Western Europe 120 90 115 Northern Europe 110 80 Northern 105 Europe Europe 70 100 95 Europe 60 Turkey 90 85 50 80 2011 2015 2020 2025 2030 2035 2040 40 2011 2015 2020 2025 2030 2035 2040 (*) Number of people between ages of 15 and 64. (*) [Age 0-14 + Age 65+ ]/ Age 15-64 Source: United Nations Source: United Nations Labor Force Participation Rates (seasonally adjusted, %) Total Fixed Investment (constant prices, 2007=100) Source: TURKSTAT 21 Source: TURKSTAT
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