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Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)
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Economic Outlook & Financing of the Growth, (Bonds, Loans & Sukuk Turkey Conference 2013)

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  • 1. Economic Outlook & Financing of the Growth  November 14 , 2013 Mehmet Şimşek Minister of Finance 1
  • 2. Outline Short‐Term Economic Outlook Financing of the Growth Long‐Term Prospects 2
  • 3. Short‐Term Economic Outlook 3
  • 4. Growth in the Short‐Term Growing at a moderate rate No boom‐bust cycles 4
  • 5. From Boom‐Bust Cycles to Stable Growth  6.5 6.0  6.0  5.5 5.1 5.1  5.0 4.4  4.5  4.0 4.0 3.7  3.5 3.1  3.0 1973‐1982 1983‐1992 Pre‐AK Party 1993‐2002 2003‐12 Medium‐Term (2014‐16) Long‐Term (2016‐23) AK Party Source: Turkstat, Medium‐Term Program *GFC: Global Financial Crisis 5
  • 6. Turkey: Growth Outlook 6 5.0 5.0 Real GDP (%) 5 4.0 4 3.6 3 2013 2014 2015 2016 Kaynak: Medium‐Term Program (2014‐16) 6
  • 7. Real GDP Forecast 140 138.1 135 Turkey Real GDP (2007=100) 130 Emerging  Europe 125 125.0 120 115 USA 115.9 110 EU 105 104.1 100.0 100 95 2007 Source: Turkstat, IMF 2008 2009 2010 2011 2012 2013 2014 2015 2016 7
  • 8. Source: Central Bank of Turkey, Turkstat * Annual percent change ** Annual difference  Sep‐13 Jul‐13 May‐13 Mar‐13 Jan‐13 Nov‐12 Sep‐12 Jul‐12 May‐12 Mar‐12 Jan‐12 Nov‐11 Sep‐11 Jul‐11 May‐11 Mar‐11 Jan‐11 Nov‐10 Sep‐10 Jul‐10 May‐10 Mar‐10 Jan‐10 Nov‐09 Sep‐09 Jul‐09 May‐09 Mar‐09 Jan‐09 Nov‐08 Sep‐08 Jul‐08 May‐08 Mar‐08 Jan‐08 Real Economic Activity Indicators 25 20 15 10 5 0 ‐5 ‐10 Industrial Production Index*(c.a.) ‐15 ‐20 Capacity Utilization** ‐25 8
  • 9. Source: HSBC 55 Oct‐13 Jul‐13 Apr‐13 Jan‐13 Oct‐12 Jul‐12 Apr‐12 Jan‐12 Oct‐11 Jul‐11 Apr‐11 Jan‐11 Oct‐10 Jul‐10 Apr‐10 40 Jan‐10 Oct‐09 Jul‐09 Apr‐09 Jan‐09 Oct‐08 Jul‐08 Apr‐08 Jan‐08 Oct‐07 Jul‐07 Apr‐07 Jan‐07 PMI 60 53.3 50 45 Above 50 last ten months 35 30 9
  • 10. Source: Central Bank of Turkey, Turkstat Real Sector Confidence Index (lhs) Oct‐13 Jul‐13 Apr‐13 Jan‐13 Oct‐12 Jul‐12 Apr‐12 Jan‐12 Oct‐11 Jul‐11 Apr‐11 Jan‐11 Oct‐10 Jul‐10 Apr‐10 Jan‐10 Oct‐09 Jul‐09 Apr‐09 Jan‐09 Oct‐08 Jul‐08 Apr‐08 Jan‐08 Oct‐07 Jul‐07 Apr‐07 Jan‐07 Confidence Indices 130 90 120 85 110 80 100 75 90 70 80 65 70 60 60 55 50 50 Consumer Confidence Index (rhs) 10
  • 11. Source:Turkstat Jan‐13 Jan‐12 Jan‐11 Jan‐10 Jan‐09 Jan‐08 Employment  since end‐2007  (Mn People, s.a.) Employment 26 25 25.5 24 23 22 21 20 11
  • 12. Unemployment & Labor Participation Rate 16 52 15 51 14 50 13 12 48 (s.a., %) (s.a., %) 49 11 47 10 Source: Turkstat Unemployment Rate (lhs) 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 45 Sep‐08 8 May‐08 46 Jan‐08 9 Labor Force Participation Rate(rhs) 12
  • 13. 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 6.2 6.8 5.3 5.0 5.0 CPI (Annual, %) 120 125.5 140 100 99.1 107.2 Inflation 80 60 40 20 0 Source: Turkstat, Medium‐Term Program (2014‐16) 13
  • 14. Low Deficit Budget Deficit‐to‐GDP (%)  12.0 10.8 10.0 8.0 7.9 5.5 6.0 Medium‐Term Program  (2014‐16) 4.1 4.0 Maastricht Criteria: 3%  3.0 1.6 2.0 0.1 0.2 0.4 1.0 1.0 1.1 0.8 0.5 0.0 ‐2.0 ‐1.3 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Achieved Maastricht Criteria except 2009 Source: Ministry of Development 14
  • 15. Lower Public Debt 75 74.0 70 67.7 65 Debt‐to‐GDP (%) 60 Maastricht Criteria:  60% 59.6 55 52.7 50 45 40 35 30 46.5 Medium‐Term Program  (2014‐16) 46.1 42.3 39.9 40.0 39.1 36.2 35.0 33.0 31.0 30.0 25 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Satisfying Maastricht Criteria since 2004 Source: Treasury 15
  • 16. C/A Deficit: High but Manageable 20 0 ‐20 ‐40 ‐60 ‐80 2002‐1 4 7 10 2003‐1 4 7 10 2004‐1 4 7 10 2005‐1 4 7 10 2006‐1 4 7 10 2007‐1 4 7 10 2008‐1 4 7 10 2009‐1 4 7 10 2010‐1 4 7 10 2011‐1 4 7 10 2012‐1 4 7 10 2013‐1 4 7 (12 Month Rolling, USD bn) 40 Current Account Current Account excl. Energy Imports Current Account without Energy Import Current Account + Net FDI + Net Errors and Omissions Source: Central Bank of Turkey 16
  • 17. Flexible Exchange Rate 80 70 Volatility (%) * 60 50 40 Turkey Emerging Economies** 30 20 10 Jul‐13 Jan‐13 Jul‐12 Jan‐12 Jul‐11 Jan‐11 Jul‐10 Jan‐10 Jul‐09 Jan‐09 Jul‐08 Jan‐08 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.  17
  • 18. 2002 2013‐9 Source: Banking Regulation and Supervision Agency 18 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 10 Sep‐08 15 May‐08 Capital Adequacy Ratio (%)  2.7 Jan‐08 NPL Ratio of Loans (%) Healthy Banking System 17.6 25 20 15.74 Target Rate 12%  Legal Rate 8%  5 0
  • 19. (2012, %, GDP) Low Household Liabilities TURKEY Lithuania Slovakia Slovenia Hungary Czech Republic Latvia Poland Estonia Italy Austria Luxembourg Belgium France Germany Malta Greece Euro Area Finland Spain Sweden Portugal United Kingdom Ireland Netherlands Denmark 0 20 Source: Central Bank of Turkey, ECB 21.2 65.4 40 60 80 100 120 140 19
  • 20. Corporate liabilities (%, GDP) Moderate Corporate Leverage Poland Czech Republic Slovakia Lithuania Hungary United Kingdom Belgium Finland Germany Estonia Latvia TURKEY France Average Greece Sweden Austria Slovenia Italy Denmark Ireland Netherlands Portugal Spain Luxembourg 43.3 47.2 0 20 Source: Central Bank of Turkey, Cetinkaya, BRSA 40 60 80 100 120 140 20
  • 21. Financing of the Growth 21
  • 22. Financing of Economic Growth Tapping into Global Savings Boosting Domestic Savings 22
  • 23. Tapping into Global Savings 23
  • 24. Maintaining Global Inflows Sustaining a Solid Fiscal Outlook Developing Corporate Debt Market Deepening Capital Markets Improving Investment Climate (FDI) 24
  • 25. Sustaining a Solid Fiscal Outlook 25
  • 26. • PSBR • Public Sector Debt • FX Risk  • Interest Rate Risk • Maturity of Borrowing Increasing Downward Trend Sustaining a Solid Fiscal Outlook 26
  • 27. Public Sector Borrowing Requirement 12 10 10.0 PSBR (%, GDP ) 8 6 Medium‐Term Program  (2014‐16) 4 2 0.8 0.5 0 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 ‐2 Source: Ministry of Development 27
  • 28. Public Sector’s Net Debt 70 61.5 60 Public Sector Net Debt (%, GDP) 55.2 49.1 50 35.4 41.7 23.9 40 19.1 10.4 34.0 29.5 28.2 3.3 2.9 6.4 30 32.5 2.7 28.9 0.9 22.3 0.7 20 26.2 31.3 30.0 31.3 17.0 27.6 26.2 10 25.3 29.9 28.1 21.6 20.3 15.8 14.7 18.9 ‐4.3 0 20.1 ‐4.2 ‐3.3 ‐10 2002 2003 2004 2005 2006 2007 Net TL Source: Treasury 2008 Net FX 2009 2010 2011 2012 2013 Q1 2013 Q2 Total Net 28
  • 29. Public Sector’s Net External Debt Stock  100 25.2 30 60 20 40 15 20 10 0 5 ‐20 (Billion TL) 25 0 ‐40 (%) 80 ‐5 ‐3.9 Public Net External Debt Stock (lhs) Source: Treasury 2013 Q2 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 ‐10 2002 ‐60 Public Net External Debt Stock/GDP (rhs) 29
  • 30. FX Risk Central Government Debt Stock (%, Total) 100 90 29.2 80 70 58.1 60 50 40 70.8 30 20 41.9 10 0 2002 2013‐ Sept. TL Stock FX Stock Source: Treasury 30
  • 31. Interest Rate Risk Sep‐13 2003 9% 22% 44% 53% 47% 25% Fixed Source: Treasury Floating CPI Indexed Fixed Floating CPI Indexed 31
  • 32. Real Interest Rates 30 25.4 25 (%) 20 15 10 5 0.7 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 0 ‐5 Source: Ministry of Development, Treasury Note: Latest data for real interest rate of the domestic debt stock is as of October 2013. 32
  • 33. Interest Payments 90 17 85.7 80 14.8 13 (%) 60 11 50 Medium‐Term Program  (2014‐16) 40 9 (%) 70 15 7 30 5 20 15.5 10 12.3 3.2 3 2.4 0 Interest Payments/Tax Revenues Source: Ministry of Finance, Ministry of Development, Treasury Note: Real interest rate of the domestic debt stock is as of October 2013. 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 1 Interes Payments/GDP (rhs) 33
  • 34. Maturity of Domestic Borrowing 75 74.1 65 (Months) 55 45 43.7 35 25 15 12.8 9.4 2012 2011 2010 2009 Time to Maturity of Domestic Debt Stock 2013 Sept. Average Maturity of Domestic Borrowing 2008 2007 2006 2005 2004 2003 2002 5 Source: Treasury Note:  Average maturity of domestic borrowing is as of October 2013. 34
  • 35. Source: Treasury 9.5 2013 Sep‐13 September 2012 2011 2010 2009 2008 2007 5.5 2006 2005 Time to Maturity  of Central Gov. External Debt Stock (Years) Maturity of External Debt 10.0 9.6 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.7 5.0 35
  • 36. Source: Bloomberg Moody's Fitch Jan‐13 Aug‐12 Mar‐12 Oct‐11 May‐11 Dec‐10 Jul‐10 Feb‐10 Sep‐09 Apr‐09 Baa3/BBB‐ Nov‐08 Jun‐08 Jan‐08 Aug‐07 Mar‐07 Oct‐06 May‐06 Dec‐05 Jul‐05 Feb‐05 Sep‐04 Apr‐04 Nov‐03 Jun‐03 Jan‐03 Investment Grade Baa2/BBB Investment Grade Ba1/BB+ Ba2/BB Ba3/BB‐ B1/B+ B2/B B3/B‐ S&P 36
  • 37. Developing Corporate Debt Market Investment  Grade is  helping  corporates Corporate Bond  Stock Corporate  Bond Stock • 2013: TL13.7bn • 2006: TL0.1bn  37
  • 38. Tax Incentives for Intern’l Corporate Bond Issuance Up to 1 year: 10% 1‐to‐3 years: 7% 3‐to‐5 years: 3% 5 years and beyond: 0% Source: Ministry of Finance 38
  • 39. Incentives for Global Fund Managers Making it easier to manage assets  in Turkey A tax free environment for  Global Funds 39
  • 40. Incentives for Venture Capital Allowing contributions to Venture Capital to be  deducted from Corporate & Personal Income Tax  Base, up to • 10% of VC Revenues • 20% of VC Capital Tax Relief on Dividends 40
  • 41. Incentives for Business Angels 41
  • 42. Deepening Capital Markets Capital markets are rather shallow Banks dominate financial markets 42
  • 43. Banking Sector dominates Financial Sector 87.4% 3.2% Insurance Share of Banks in Financial Sector Source: Central Bank of Republic of Turkey 2.0% Mutual  Funds 43
  • 44. Market Capitalization 60 48 50 (%, GDP) 40 30 27 20 15 10 0 Turkey 2002 Turkey 2013‐9 EM Average 2013‐9 Source: Capital Markets Board Emerging Economies: Chile, Thailand, Colombia, India, Brazil, China, Indonesia, Mexico, Russia,  Sri Lanka, Hungary, Argentina 44
  • 45. Investment Funds’ Net Asset Value 16 14 14 (2012, %, GDP) 12 10 8 6 4 2 2 0 Turkey Source: Capital Markets Board EM Average 45
  • 46. Free‐Floats 80 70 70 (%) 60 50 40 30 28 20 10 Turkey EM Average Most Turkish companies are privately owned Source: Capital Markets Board, Central Securities Depository 46
  • 47. A New Capital Markets Law New legal framework in  line with the best global  practices •Increasing financial deepening & innovation •Strengthening investor rights •Improving corporate governance 47
  • 48. Restructuring of Borsa Istanbul Regional  Leadership Raising  Market  Cap/GDP to 80% 1,000 new  companies to be listed 48
  • 49. Istanbul as a Financial Center Financial sector currently employs 200 thousand people Istanbul Finance Center is likely to add 150 thousand 49
  • 50. Introducing New Instruments: Sukuk Similar to eurobonds, internat’l holders aren’t subject to w/holding tax Sep‐12: Sukuk issued for $1.5bn in international market  Oct‐12: Sukuk denominated in TL issued for TL1.6bn Feb‐13: Sukuk issued for TL1.5bn Aug‐13: Sukuk issued for TL1.8bn Oct‐13: Sukuk issued for $1.3bn in international market  50
  • 51. Improving Investment Climate (FDI) 132.0 135 120 FDI ınflows (Bn $) 105 90 75 60 45 30 15 14.8 0 1980‐2002 2003‐2013 September Source: Central Bank of Turkey 51
  • 52. Raising Domestics Savings 52
  • 53. Savings 25 20 15 10 5 0 ‐5 2002 2003 2004 2005 2006 2007 Public Savings/GDP 2008 2009 2010 2011 2012 2013 Private Savings/GDP Source: Ministry of Development 53
  • 54. Determinants of Savings Increasing Employment Improving Labor Market Flexibilty Increasing Labor Participation Productivity Enhancing Human  Capital Stock Competition R&D Improving  Infrastructure Propensity to Save Increasing Private Savings 54
  • 55. Increasing Employment 55
  • 56. Source: OECD Netherlands Denmark Norway Ireland Switzerland Germany Australia United Kingdom Sweden Belgium 40 Luxembourg Finland New Zealand Italy Austria France Spain Estonia Canada Chile Portugal Hungary Slovenia Iceland Poland Slovak Republic Israel Czech Republic Greece Mexico 50 Korea Turkey (2011,  hour) Average Usual Weekly Hours Worked on the Main Job 48.9 48 46 44 42 OECD Average: 38.5 38 36 34 32 30 56
  • 57. Netherlands Switzerland Ireland United Kingdom Australia New Zealand Germany Japan Norway Mexico Denmark Austria Canada Belgium Italy Iceland Chile Luxembourg Israel Sweden Spain France United States Finland Portugal Turkey Korea Greece Estonia Poland Slovenia Hungary Czech Republic Slovak Republic (2012,  %, Total Employment) Part Time Employment 40 35 30 25 20 OECD Average: 16.9 15 11.8 10 5 0 Source: OECD 57
  • 58. Retirement Age* 70 70 65 60 Men (Age) 60 Woman (Age) 65.6 65 65 55 50 55 50 45 45 40 40 1993 2010 Turkey 2050 1993 2010 Turkey OECD 2050 OECD Various OECD countries linked pension age to life expectancy France by 2012 Greece by 2020 Source: OECD Pensions Outlook 2012 *Pensionable Age in OECD Countries Italy by 2026 Denmark by 2027
  • 59. Employment Rate  70 65.1 65 60 (%) 55 50 46.9 45 41.3 40 35 30 Turkey 2004 Turkey Jul‐2013 OECD Average Q2‐2013 Source: Turkstat, OECD 59
  • 60. Productivity 60
  • 61. Enhancing Human Capital Stock: Education Budget 19 18 18 Education Budget (% of Total) 17 16 15 14 13 12 11 10 9.4 9 2002 Source: Ministry of Finance 2014 61
  • 62. Enhancing Human Capital Stock: Schooling Rates 130 107.6 110 96.8 (Gross Rates) 96.5 90 92.1 80.8 70 50 44.0 35.8 30 11.7 10 Preschool (age of 4‐5 ) Primary School 2002‐03 Source: Ministry of Development Secondary School Higher Education 2012‐13 62
  • 63. Enhancing Human Capital Stock:  PISA Results, Gap b/w Turkey & OECD 80 70 60 50 40 30 science math 2006 2009 Source: OECD 63
  • 64. R&D Spending 2023 •3.00% 2018 •1.8% 2013 • 0.92% 2002 • 0.53% Source: The Scientific and Technological Council of Turkey 64
  • 65. Patent, Industrial Design & Trade Mark Applications Trade Mark  applications Industrial design  applications 2012: 111,143 2002: 36,429 2012: 41,220 Patent  applications  2012: 11,599 2002: 1,874 2002: 20,302 65
  • 66. Improving Infrastructure High Speed Railway Projects Completed:  888 km Under Construction: 1,748 km Planned:  1,356 km  Airports  avaible for civil  aviation  2003: 26 Airports 2013: 52 Airports  66
  • 67. 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 (September 30, 2013) 2,244 Km Total of Motorways 20,350 Km Total of State and  Provincial Dual  Carriageways Total: 22,594 Km 67
  • 68. Propensity to Save 68
  • 69. Propensity to Save: Increasing Private Pensions 25% State Contribution Penalty for Early  Withdrawals 69
  • 70. 10/2013 10/2013 09/2013 09/2013 08/2013 08/2013 08/2013 07/2013 07/2013 06/2013 06/2013 05/2013 05/2013 04/2013 04/2013 03/2013 03/2013 03/2013 02/2013 02/2013 01/2013 01/2013 Total Amount of Participant´s Funds (TL, Bn) Propensity to Save: Increasing Private Pensions 26 25 25.1 24 23 22 21 20 Source: Pension Monitoring Center 70
  • 71. Strong Long‐Term Prospects 71
  • 72. GDP 2050 $ 5 trillion 2002 2023 $ 2 trillion 2002 $ 230  billion 2012 $ 786 billion Source: TURKSTAT, Medium‐Term Program,PwC 2050 72
  • 73. GDP per Capita 2002 2050 $ 50,000 2023  $ 25,000 2012 $10,497 2002 $ 3,492 2050 Source: TURKSTAT, Medium‐Term Program,PwC 73
  • 74. Determinants of Long‐Term Growth Quality of Institutions Demographics Productivity 74
  • 75. Improving Quality of Institutions Corruption  perception:  2012: 54th in 176  2002: 65th in 102 Ease of Doing  Business:  2013‐14: 69th in 189 2006: 84th in 175 Global  competitiveness:  2013: 44th in 148  2005: 71st in 117 75
  • 76. EU Accession Process (Chapters) 25 20 20 14 15 10 5 0 Opened Source: Ministry of EU Affairs Remaining 76
  • 77. Annual Average Growth Rate (%, 2001‐11) Growth Rate of Working‐Age Population 2.0 2.0 1.8 1.6 1.4 1.2 1.0 1.0 0.8 0.7 0.6 0.3 0.4 0.2 0.0 Turkey Source: OECD, Eurostat, TURKSTAT USA OECD EU‐27 77
  • 78. THANK YOU… 78

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