Republic of Turkey Undersecretariat of Treasury Turkish Economy: Recent Developments February 2011
-16 -12 12 -8 -4 0 4 8 GDP Growth Rates (%, YoY) Source: TURKSTAT 01 Q1 01 Q3 02 Q1 02 Q3 03 Q1 03 Q3 04 Q1 04 Q3 05 Q1 05 Q3 06 Q1 06 Q3 07 Q1 07 Q3 08 Q1 08 Q3 09 Q1 09 Q3 10 Q1 10 Q3 2
Contribution to GDP Growth (%) 20 16 12 8 4 0 -4 -8 -12 -16 -20 -24 2002 I 2003 I 2004 I 2005 I 2006 I 2007 I 2008 I 2009 I 2010 I III III III III III III III III III Private Cons. Private Inv. Gov. Cons. and Inv. Net Export Stock Building GDP Growth Source: TURKSTAT 3
Industrial Production Index (Seas. Adj.) 130 123.9 120.5 120 Percentage Change 110 100 90 I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV 2005 2006 2007 2008 2009 2010 Source: TURKSTAT 4
Real Sector Confidence Index 140 120 100 80 60 40 2007-1 3 5 7 9 11 2008-1 3 5 7 9 11 2009-1 3 5 7 9 11 2010-1 3 5 7 9 11 2011-1 Source: CBRT 5
100 Consumer Confidence Index 60 70 80 90 Source: TURKSTAT-CBRT 2008-1 2 3 4 5 6 7 8 9 10 11 12 2009-1 2 3 4 5 6 7 8 9 10 11 12 2010-1 2 3 4 5 6 7 8 9 10 11 12 6
6.0 6.5 7.0 7.5 8.0 8.5 GDP Growth Projections for 2010 MTP Merrill Lynch HSBC Unicorn Commerzbank RBS UniCredit JP Morgan CBRT- Expt Surv Morgan Stanley EC Dz Bank Citibank Global Insight IMF Credit Suisse BNP Paribas UBS World Bank Barclays OECD Goldman Sachs ING Bank 7
3.0 3.5 4.0 4.5 5.0 5.5 GDP Growth Projections for 2011 HSBC World Bank RBS UniCredit ING Bank JP Morgan MTP IMF Citibank Merrill Lynch Global Insight Barclays UBS Morgan Stanley Dz Bank Credit Suisse CBRT- Expt Surv BNP Paribas Commerzbank Unicorn OECD EC Goldman Sachs 8
GDP Growth: Medium Term Program Targets (Annual % Change) 6 5.5 5.0 5 4.5 4 3 2 2011 2012 2013 9
Annual Change in Unemployment Rate (Percentage Points) 7 Increase in Unemployment Decrease in Unemployment 6 4.8 5.0 5 4.4 3.9 4.2 3.6 4 2.9 3.2 2.7 3 1.8 2 1 0.5 -0.5 -1.0 -1.7 -2.1 -2.9 -2.6 -2.5 -2.2 -2.0 -2.1-1.8 0 -1 -2 -3 2009-1 2 3 4 5 6 7 8 9 10 11 12 2010-1 2 3 4 5 6 7 8 9 10 10
Unemployment Rate (%) 16 15 14.0 14 13 12 11.0 11.2 10.8 10.6 11 10.2 10.5 10 10.3 10.3 9 8 2002 2003 2004 2005 2006 2007 2008 2009 2010 October Source: TURKSTAT Note: 2010 October unemployment figure is seasonally adjusted 11
CPI and Core Index (Annual % Change) 14 12 10 8 6 4.9 4 3.2 2 2007-1 3 5 7 9 11 2008-1 3 5 7 9 11 2009-1 3 5 7 9 11 2010-1 3 5 7 9 11 2011-1 CPI Index I Source: CBRT 12
Current Account Deficit (Annualized, Billion USD) 55 48.6 50 45 40 35 30 25 20 15 10.1 10 Current Account Deficit Current Account Deficit Excluding Energy 5 0 -5 -10 -15 -20 -25 2007-1 3 5 7 9 11 2008-1 3 5 7 9 11 2009-1 3 5 7 9 11 2010-1 3 5 7 9 11 Source: CBRT 13
Financing of Current Account Deficit (Billion USD) 2006 2007 2008 2009 2010 CURRENT ACCOUNT BALANCE -32.2 -38.4 -42.0 -14.0 -48.6 CAPITAL AND FINANCIAL ACCOUNT (excl. Reserves) 38.2 44.7 36.2 9.0 57.0 Direct Investment (net) 19.3 19.9 17.0 6.9 7.1 Portfolio Investment and Deposits 17.3 0.9 2.4 7.9 34.0 Equity 1.9 5.1 0.7 2.8 3.5 Debt Securities 9.5 -2.4 -4.5 0.1 16.1 Foreign Banks' Deposits 5.9 -1.9 6.2 5.0 14.4 Public Sector (net) -1.9 -3.0 4.0 2.7 5.4 Banks (net) -4.5 2.1 -5.8 1.6 26.6 Non-Bank Private Sector (net) 18.8 26.0 23.3 -10.4 -6.2 Trade Credits (net) -1.7 2.7 3.3 -2.5 0.8 Other -9.1 -4.0 -8.0 2.8 -10.7 Reserve Assets -6.1 -8.0 1.1 -0.1 -12.8 NET ERRORS AND OMISSIONS 0.2 1.8 4.7 5.1 4.3 14 Source: CBRT
Central Bank’s Gross FX Reserves (Billion USD) $82.6 billion* 85 75 65 55 45 35 25 15 J 02 J 03 J 04 J 05 J 06 J 07 J 08 J 09 J 10 J 11 M S M S M S M S M S M S M S M S M S (*) As of February 4 2011 Source: CBRT 15
2010 Fiscal Developments IMF Defined Public Sector Primary Balance/GDP (%) Central Government Budget Deficit / GDP (%) 5.0 0.2 4.9 0.1 4.5 0 4.0 expected to be 4.0 around near balance or a slight -0.1 ~3.6 surplus 3.5 -0.2 -0.17 3.0 -0.3 -0.34 2.5 -0.4 Target Revised est. Outturn Target Revised est. Outturn Domestic Debt Rollover Ratio EU Defined General Gov't Gross Debt Stock / GDP (%) 50 102 49.0 99,5 100 48 98 46 96 44 94 42.3 ~41.5 92 42 89,3 90 40 88 38 86 36 84 Target Revised est. Outturn Target Outturn 16
Central Government Budget Deficit: Medium Term Program Targets (% of GDP) 3.5 3.0 2.8 2.4 2.5 2.0 1.6 1.5 1.0 0.5 0.0 2011 2012 2013 Source: Medium Term Program 17
Public Sector Primary Balance: Medium Term Program Targets (IMF Defined, % of GDP) 1.2 1.0 1.0 0.8 0.7 0.6 0.4 0.3 0.2 0.0 2011 2012 2013 Source: Medium Term Program 18
General Government Debt (EU Defined, % of GDP) 80 73.7 67.4 70 59.2 60 52.3 50 46.1 45.5 42.3 40.6 39.5 39.4 38.8 40 36.8 30 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011P 2012P 2013P Source: Treasury, Medium Term Program 19
Treasury Financing Program (billion TL) 2009 2010 2011 Program I- TOTAL DEBT SERVICE 148.9 194.8 152.8 Domestic Debt Service 134.2 178.1 135.0 External Debt Service 14.6 16.7 17.8 II- FINANCING 148.9 194.8 152.8 TOTAL BORROWİNG 150.2 173.9 131.7 Domestic Borrowing 138.9 159.0 119.1 External Borrowing 11.3 14.9 12.5 NON-DEBT CREATING FINANCING SOURCES* -1.3 20.9 21.1 Domestic Debt Rollover Ratio (%) 103.5 89.3 88.0 (*) The cash primary balance; proceeds from privatization, unemployment insurance fund and saving deposit insurance fund; receipts from on lending and guaranteed debt; and change in cash balance 20 20 Source: Treasury
Composition of Central Government Gross Debt (%) 100 41.1 75 53.7 58.5 62.4 62.8 66.2 68.7 70.9 73.4 50 58.9 25 46.3 41.5 37.6 37.2 33.8 31.3 29.1 26.6 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Foreign Exchange TL Source: Treasury 21
Composition of TL Denominated Domestic Debt (%) 2002 2010 %37 %49 %51 %63 TL Floating TL Floating TL Fixed TL Fixed Source: Treasury 22
Average Maturity of Borrowing Domestic Borrowing (months) Eurobond Issuance (years) 30 30.0 70 59 25 60 22.4 20.6 50 20 44 17.6 16.5 40 14.8 35 14.2 34 15 32 12.2 28 28 30 10.1 9.9 9.5 9.1 10 8.6 8.2 20 15 7.0 6.6 12 5.0 9 5 10 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* 2011* 2002 2003 2004 2005 2006 2007 2008 2009 2010 Euro USD (*) As of January 23 Source: Treasury
Banking Sector: Capital Adequacy Ratio (%) 35 30.9 28.2 30 25.1 23.7 25 21.9 20.6 18.9 18.9 18.0 20 15 10 5 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: BRSA 24
Banking Sector: Capital Adequacy Ratio in Selected Emerging Markets (%, 2009) 23,9 25 20,9 20,6 19,8 18,8 20 17,6 17,6 15,9 15,8 15,4 15,1 14,7 14,4 14,3 14,0 13,3 12,9 12,1 11,4 15 10 5 0 Turkey Egypt Thailand Hungary Brazil Czech Rp. Poland China Russia Belarus Indonesia India Mexico Malaysia Romania Korea Chile Colombia Malta Source: IMF, BRSA 25
Banking Sector Asset Quality (NPL Ratio, %) 24 21.2 20 16 11.5 12 7.6 8 6.0 5.3 4.7 3.7 3.7 3.7 3.5 4 1.5 0.8 0.8 0.9 0.6 0.5 0.4 0.6 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Gross Net 26 Source: BRSA
Banking Sector: FX Position (Million USD) 600 470 408 400 187 161 141 200 16 0 -63 -71 -200 -217 -400 -600 -549 -800 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* (*) As of January, 28 27 Source: BRSA
Banking Sector: Return on Equity and Assets (%) 30 24.8 25 22.8 21.0 20.0 20 18.6 18.2 15.9 15.8 15 12.1 10 5 3.6 3.4 3.3 3.3 3.3 3.0 2.7 2.5 1.5 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Return on Equity Return on Assets Source: BRSA 28
Household Liabilities (% of GDP) 70 64 61 60 59 60 50 40 30 20 15 14 12 10 10 0 2006 2007 2008 2009 Turkey Euro Area Source: CBRT, ECB 29
Consumer Credits (billion TL) 140 126.9 120 100 90.1 90.1 80 65.0 60 45.7 40 27.9 20 3.2 3.2 2.9 2.2 1.8 1.5 0 2005 2006 2007 2008 2009 2010 FX Denominated TL Denominated Source: BSRA 30
Structural Reforms I Public Sector Reform I. Public Financial Management and Control Law, 2003 II. Turkish Court of Accounts Law, 2010 Financial Sector Reform I. Restructuring the financial system and improving the capital adequacies. II. Banking Law, 2005 (Regulating the banking sector in line with the EU legislation) Social Security and Health Reform I. Social Security Law, 2008 (Rehabilitating the social security system via parametric reform and unifying social security institutions, payments, introducing universal health insurance system) Enhancing the Role of Private Sector I. The Coordination Council for the Improvement of Investment Environment II. FDI Law, 2003 III. Code of Obligations, 2011 IV. Commercial Code, 2011 31
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