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17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
17. Avrasya Ekonomi Zirvesi (05.02.2014)
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17. Avrasya Ekonomi Zirvesi (05.02.2014)

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  • Foreign direct investment inflows and long term loans are the two important factors in terms of financing quality came in at $31.2 billion 12-month trailing in July 2013.
  •  
  • State contribution up to 25% of the annual gross minimum wage. 3 years  15%6 years  35%10 years  60%Retirement  100% of the 25% State ContributionParticipants:28.12.2012: 3.119.03330.08.2013: 3.818.622
  • Transcript

    • 1. Turkey’s Economic & Political Outlook February 5, 2014 Mehmet Şimşek Minister of Finance
    • 2. Outline Economic & Political Outlook Structural Reforms & Priorities Long-Term Prospects 2
    • 3. Political Outlook: Is Political Stability at stake? 3
    • 4. 3 Elections Ahead Local Presidential Parliamentary • March 30, 2014 • July 2014 • June 2015 4
    • 5. KONDA Poll for Local Elections (Jan-14) 50 47.7 45 40 35 28.2 ( %) 30 25 20 14.4 15 10 5.9 3.7 5 0 AK PARTY CHP MHP BDP Others Source: GENAR Research Company AK PARTY: Justice and Development Party CHP: Republican People’s Party MHP: Nationalist Movement Party BDP: Peace and Democracy Party 5
    • 6. ( %) GENAR Poll for Local Elections (Jan-14) Source: GENAR Research Company AK PARTY: Justice and Development Party CHP: Republican People’s Party MHP: Nationalist Movement Party BDP: Peace and Democracy Party 6
    • 7. ( %) DENGE Poll for Local Elections (Jan-14) Source: DENGE Research Company AK PARTY: Justice and Development Party CHP: Republican People’s Party MHP: Nationalist Movement Party BDP: Peace and Democracy Party SP: Felicity Party
    • 8. ORC Poll for Local Elections (Jan-14) 50 47.0 45 40 33.6 35 ( %) 30 25 20 15.0 15 10 4.4 5 0 AK PARTY CHP MHP Others Source: ORC Research Company AK PARTY: Justice and Development Party CHP: Republican People’s Party MHP: Nationalist Movement Party 8
    • 9. ( %) SONAR Poll for Local Elections (Jan-14) Source: DENGE Research Company AK PARTY: Justice and Development Party CHP: Republican People’s Party MHP: Nationalist Movement Party BDP: Peace and Democracy Party SP: Felicity Party
    • 10. Political Outlook Polls indicate that political outlook is not at stake Support for the ruling AK Party remains very strong
    • 11. Economic fallout from political uncertainty? 11
    • 12. Growth Outlook Upside • Stronger external demand • EU pulling out of recession • MENA becoming less disruptive Downside • Political uncertainty • Tighter financial conditions 13
    • 13. Source: TURKSTAT, Inflation Report 2014-I 14 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 99.1 100 1997 1996 1995 125.5 140 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 107.2 120 1981 1980 (CPI, Annual, %) Inflation 80 60 40 20 0
    • 14. Inflation Outlook Upside • Tax Hikes • TL Depreciation Downside • Widening Output Gap 15
    • 15. Impact of Recent Tax Hikes on Inflation Alcoholic Beverages 0.04 ppt Tobacco 0.18 ppt Auto 0.29 ppt 0.5 ppt 16
    • 16. Impact of Currency Depreciation on Inflation 10% currency depreciation 1.5ppt higher inflation Source: Kara, Hakan and Öğünç F. (2011). "Effect of Exchange Rate and Import Prices on Inflation", CBRT, Economic Notes, No. 2011/14. 17
    • 17. Oct-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 ( %) Monetary Policy Tightening 15 13 12.0 11 10.0 9 8.0 7 5 3 CBRT Funding Rate Source: CBRT O/N Borrowing O/N Lending Policy Rate 18
    • 18. Room to Manoeuvre 19
    • 19. Budget Deficit-to-GDP, % Low Deficit Maastricht Criteria: 3% Achieved Maastricht Criteria except 2009 Source: Ministry of Development 20
    • 20. Budget Deficit-to-GDP, % Budget Deficit (2014) Source: IMF, OECD, Ministry of Development 21
    • 21. Lower Public Debt Debt-to-GDP, % Maastricht Criteria: 60% Satisfying Maastricht Criteria since 2004 Source: Treasury 22
    • 22. Net External Debt 100 25.2 30 80 25 60 88.4 15 20 10 (%) (Billion TL) 40 20 0 5 -20 -75.8 -40 -5 -60 -5.0 Public Net External Debt Stock (Left Axis) Q3-13 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 -10 2002 -80 Source: Treasury 0 Public Net External Debt Stock/GDP (Right Axis) 23
    • 23. (%) Real & Nominal Interest Rates on Gov’t Debt Source: Treasury 24
    • 24. Turkey’s Soft Spot 25
    • 25. Current Account Deficit Net Gold Exports -$4.8 billion +$5.7 billion -$10.2 billion (12 Month Rolling, USD bn) • 2011: • 2012: • Nov-13: Source: CBRT 26
    • 26. Factors behind high C/A Deficit (2011-13) Strong domestic demand Euro crisis Energy prices Arab Spring 27
    • 27. (12 Month Rolling, USD bn) Financing Current Account Deficit Source: CBRT 28
    • 28. Turkey’s FX Risk? 29
    • 29. Exchange Rate Volatility 80 70 Volatility (%) * 60 50 40 Turkey Emerging Economies** 30 20 10 0 Source: Bloomberg * Volatility is calculated using 30-day moving average. ** Emerging Markets include Brazil, Chile, Colombia, Czech Republic, Hungary, Indonesia, Malaysia, Mexico, Philippines, Poland, Romania, South Africa, Korea, and Turkey. 30
    • 30. Turkey's FX Position (billion $) Banking Sector* Assets Liabilities Net Position 486.0 484.7 1.4 Real Sector** 93.0 263.2 -170.2 Short Term 78.2 95.1 -16.9 191.0 0.5 190.5 Household*** Source: CBRT * Data: Mar. 2013 ** Data: Nov. 2013 *** Data: Mar. 2013
    • 31. Firms SMEs have only $34.1 billion FX debt • 2009 regulation on firms’ FX borrowing • Credit amount no less than $5 million • Maturity of minimum 2 years • Not allowed to borrow for working capital requirements FX loans largely used by big firms FX borrowing mainly hedged by export earnings 32
    • 32. Source: BRSA 30 Oct-13 May-13 Dec-12 Jul-12 Feb-12 Sep-11 Apr-11 Nov-10 Jun-10 Jan-10 Aug-09 Mar-09 Oct-08 May-08 Dec-07 Jul-07 Feb-07 Sep-06 Apr-06 Nov-05 Jun-05 Jan-05 Aug-04 Mar-04 Oct-03 60 May-03 Dec-02 (Foreign Currency Loans/Total Loans, %) Foreign Currency Loans 65 59 55 50 45 40 35 27 25 20 33
    • 33. Dec-13 Jun-13 Dec-12 Jun-12 Dec-11 Jun-11 Dec-10 Jun-10 Dec-09 Jun-09 Dec-08 Jun-08 Dec-07 Jun-07 Dec-06 Jun-06 Dec-05 (Billion $) Foreign Currency Deposits of Residents 140 134.0 130 120 110 100 90 80 70 60 50 Source: BRSA 34
    • 34. Source: BRSA 2002 Nov-13 Sep-13 May-13 Jan-13 Sep-12 May-12 Jan-12 Sep-11 May-11 Jan-11 Sep-10 May-10 Jan-10 Sep-09 May-09 Jan-09 Sep-08 May-08 Capital Adequacy Ratio, % 2.8 15 Jan-08 NPL Ratio of Loans (%) Healthy Banks 17.6 25 20 15.6 Target Rate 12% 10 Legal Rate: %8 5 0 35
    • 35. Low Household Leverage (Household Liabilities, % of GDP, June 2013) No FX exposure Source: CBRT, ECB 36
    • 36. Priorities & Structural Reforms 37
    • 37. Chapter- 1 Moving up the ValueChain Combatting Shadow Economy Deepening Capital Markets Improving Infrastructure 38
    • 38. Moving up the Value-Chain 39
    • 39. Moving up the Value Chain Value of export products per kg Turquality Japan $3.5 Germany $4.1 $3.28 South Korea $3.0 Turkey $1.58 Strengthening the link b/w commerce and R&D 40
    • 40. Moving up the Value Chain R&D Spending 2023 •3.00% 2018 2012 2002 •1.8% • 0.92% • 0.53% Source: The Scientific and Technological Council of Turkey 41
    • 41. Deepening Capital Markets 42
    • 42. Deepening Capital Markets Global Financial Centres 80 Index 2018 25th 70 2013 44th (2013) 60 2009 72nd 77 71 66 73 68 50 44 40 31 30 20 Rio de Jeneiro Source: Global Financial Centres Index ISTANBUL Mexico Mauritius Warsaw Prague Budapet 43
    • 43. Increasing Savings: Private Pensions 25% State Contribution 1 million new participants and TL5bn funds since end-2012 Penalty for Early Withdrawals 44
    • 44. Combatting Shadow Economy 45
    • 45. Size of Shadow Economy (%, GDP) Down 6 percentage points Source: Schneider, 2013 46
    • 46. Size of Shadow Economy (%, GDP) Source: Schneider, 2013 47
    • 47. Improving Infrastructure 48
    • 48. Dual Carriageway Network (January 1, 2003) 1,714 Km Total of Motorways 4,387 Km Total of State and Provincial Dual Carriageways Total: 6,101 Km Dual Carriageway Network (January 2014) 2,244 Km Total of Motorways 20,807 Km Total of State and Provincial Dual Carriageways Total: 23,051 Km 49
    • 49. High Speed Railway Projects EDİRNE ZONGULDAK SAMSUN İSTANBUL TEKİRDAĞ AMASYA ÇANKIRI İZMİT Bandırma KARS KARABÜK 105 km BURSA ERZURUM BİLECİK Yenişehir 533 km ANKARA ERZİNCAN KIRIKKALE SİVAS ESKİŞEHİR BALIKESİR 405 km Yerköy Polatlı MUŞ AFYONKARHİSAR İZMİR MANİSA ELAZIĞ 212 km UŞAK VAN KAYSERİ MALATYA NİĞDE 624 km KONYA ISPARTA DENİZLİ BATMAN MARDİN BURDUR OSMANİYE Completed (888 km) Under Construction (1796 km) Bidding Phase (454 km) Project Phase (354 km) DİYARBAKIR K.MARAŞ AYDIN GAZİANTEP KARAMAN MERSİN ADANA Çobanbey 50
    • 50. Chapter- 2 Enhancing Human Capital Stock Increasing Labor Market Flexibility Reducing Energy Import Bill Enhancing Democratic Standards 51
    • 51. Enhancing Human Capital Stock 52
    • 52. Students (%, Total Population) Source: TURKSTAT, Eurostat Included Informal Education 53
    • 53. % Share of Education Budget Source: Ministry of Finance 54
    • 54. Labor Market Flexibility 55
    • 55. Average Retirement Age Source: OECD 56
    • 56. Labor Participation Rate by Education (2013 October) Labor Participation Rate, Female Source: Turkstat, OECD OECD Average: 62,3 57
    • 57. Reducing Energy Import Bill 58
    • 58. (Brent, $ pbl) Energy Imports (Billion Dollars) Energy Import Bill Source: TURKSTAT, Bloomberg 59
    • 59. Developing Local & Renewable Resources Electricity Generation Installed Capacity MW Current Installed Capacity (2013) 64,044 - Renewable Energy 25,596 Power Plants Under Construction 14,338 - Renewable Energy 10,804 In 5-to-7 years 78,382 - Renewable Energy 36,401 % of Total 40.0 75.4 46.4 Source: Ministry of Energy and Natural Resources 60
    • 60. Building the Nuclear Capacity Akkuyu: JW with Russia Sinop JW with a Japanese-French consortium Working on a 3rd plant 61
    • 61. Strong Long-Term Prospects 62
    • 62. GDP Per Capita GDP Per Capita ($,PPP) 19 000 18 125 17 000 15 000 13 000 11 000 9 000 8 667 7 000 5 000 2002 Source: TURKSTAT 2012 63
    • 63. Real Convergence with AMs 65 60 Turkey / USA 55 Turkey /European Union 58.6 50 45 40 37.0 35.5 35 30 25 22.7 20 2002 Source: IMF,OECD, Turkstat 2013 64
    • 64. Determinants of Long-Term Growth Quality of Institutions Demographics Productivity 65
    • 65. Improving Quality of Institutions Corruption Perceptions: 2013: 53rd in 177 2002: 65th in 102 Global Competitiveness: 2013: 44th in 148 2005: 71st in 117 Source: WB, WEF, Transparency International Ease of Doing Business: 2013-14: 69th in 185 2006: 84th in 175 66
    • 66. Annual Average Population Growth Rate (%, 2001-11) Growth Rate of Working-Age Population Source: OECD, Eurostat, TURKSTAT 67
    • 67. Have Investors Noticed the Transformation? 68
    • 68. International Companies Operating in Turkey (1000s) Source: Ministry of Economy 69
    • 69. Foreign Direct Investment Inflows 160 133.7 (Billion dollar) 140 120 100 80 60 40 20 14.8 0 1980-2002 2003-2013 November Source: CBRT 70
    • 70. Oct 13 Jan 13 Apr 12 Jul 11 Oct 10 Jan 10 Apr 09 Jul 08 Oct 07 Jan 07 Apr 06 Jul 05 Oct 04 Jan 04 Apr 03 Jul 02 Oct 01 Jan 01 Apr 00 Jul 99 Oct 98 Jan 98 Apr 97 Jul 96 Oct 95 Jan 95 Apr 94 Jul 93 Oct 92 Jan 92 Apr 91 Jul 90 65 Oct 89 Jan 89 (2003=100) REER Appreciation 135 125 115 105 95 85 75 Linear Trend 55 Source: CBRT 71
    • 71. Thank You… 72

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