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  • Wehavecarriedoutbankingsectorstresstests since 2004.in 2006, weinitiatedthe12% objectivecapitaladequacyratioapplication (Basel iI, 8%).In 2009, with the amendment made to Decision No. 32, we prevented the household to take currency risk by prohibiting foreign currency loans. We reduced the interest risk of the household.18 Haziran 2011(Resmi Gazete): Finansmanşirketleri Mart, Haziran, Eylül ve Aralikdönemleriitibariylakonut ve taşitkredisidişindakitüketicikredileriiçinkreditutarininyüzde 4’ü oraninda, anapara, faizveya her ikisinintahsilinde 30 gündenfazlaancak 90 gündenazgecikmeolanbuniteliktekikredileriçinkreditutarininyüzde 8’i oranindagenelkarşilikayirirlar.”
  • GAP, DAP, KOP ve DOKAP gibi bölgesel kalkinma projelerinin istihdam yaratma potansiyeli oldukça yüksektir. Bu nedenle Hükümetimiz son yillarda bu projelere giderek artan oranda kaynak ayirmaktadir. Örneğin, GAP projesinin tamamlanmasiylayaklaşik 1,3 milyon kişiye doğrudan istihdam, millî ekonomiye ise yillik 6,6 milyar dolar katkisağlanmasi beklenmektedir. Benzer şekilde, DAP projesinin de 1,2 milyon kişiye istihdam yaratacaği ve ekonomiye yillik 1,4 milyar dolar katkisağlayacaği öngörülmektedir.
  • GAP, DAP, KOP ve DOKAP gibi bölgesel kalkinma projelerinin istihdam yaratma potansiyeli oldukça yüksektir. Bu nedenle Hükümetimiz son yillarda bu projelere giderek artan oranda kaynak ayirmaktadir. Örneğin, GAP projesinin tamamlanmasiylayaklaşik 1,3 milyon kişiye doğrudan istihdam, millî ekonomiye ise yillik 6,6 milyar dolar katkisağlanmasi beklenmektedir. Benzer şekilde, DAP projesinin de 1,2 milyon kişiye istihdam yaratacaği ve ekonomiye yillik 1,4 milyar dolar katkisağlayacaği öngörülmektedir.
  • 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: 3.119.03321.06.2013: 3.661.326
  •  Turkey ranked 65th out of 102 countries in 2002 whereas it became 54th among 176 countries in 2012.
  • Turkey ranked 65th out of 102 countries in 2002 whereas it became 54th among 176 countries in 2012.
  • While Turkey ranked 71st out of 125 countries in the Global Competitiveness Index in 2005, it has become 43thamong 144 countries in the period of 2012-2013.
  • While Turkey ranked 71st out of 125 countries in the Global Competitiveness Index in 2005, it has become 43rdamong 144 countries in the period of 2012-2013. Turkey moved up by 16 places compared to the previous period. Turkey became 2nd fastest rising country in the most competitive economies list. 
  • While Turkey ranked 84th among 175 countries in 2006, it has become 71stamong 185 countries in 2012.  
  • While Turkey ranked 84th among 175 countries in 2006, it has become 71stamong 185 countries in 2012.  

European policy centre v6   10.07.2013 European policy centre v6 10.07.2013 Presentation Transcript

  • Turkish Economy: The Road Ahead Brussels July 10, 2013 Mehmet Şimşek Minister of Finance 1
  • Outline A Convergence Story Challenges, Priories & Reform Agenda Long-Term Prospects 2
  • A Convergence Story 3
  • Real GDP Source: TURKSTAT, Eurostat RealGDP(2002=100,s.a.) 4 162.0 131.9 111.0 151.6 90 100 110 120 130 140 150 160 170 2002-Q1 Q3 2003-Q1 Q3 2004-Q1 Q3 2005-Q1 Q3 2006-Q1 Q3 2007-Q1 Q3 2008-Q1 Q3 2009-Q1 Q3 2010-Q1 Q3 2011-Q1 Q3 2012-Q1 Q3 2013-Q1 Turkey Poland Czech Republic Hungary
  • GDP Per Capita Source: TURKSTAT 5 1,099 1,573 800 1,000 1,200 1,400 1,600 2002 2012 Real, ¨ 3,492 10,504 3,000 5,000 7,000 9,000 11,000 2002 2012 Nominal, $ 8,667 17,375 6,000 9,000 12,000 15,000 18,000 2002 2012 PPP, $
  • Real Convergence Kaynak: iMF, TURKSTAT, Eurostat %ofGDPperCapita(PPP,$) 6 23.5 34.8 36.0 56.0 20 25 30 35 40 45 50 55 60 2002 2012 Turkey /USA Turkey /European Union
  • 7 Employment Source:TURKSTAT Employmentsince2005 (mnpeoples.a.) 25.6 19 20 21 22 23 24 25 26 2005-1 2006-1 2007-1 2008-1 2009-1 2010-1 2011-1 2012-1 2013-1
  • How did we achieve it? Political Stability Improving Quality of Institutions Price Stability Fiscal Prudence A Macro- Prudential Framework 8
  • 9 Political Stability •17 months 1923-2002 •AK Party 2002-13
  • Improving Quality of Institutions 10 Doing Business Corruption Perception Index Global Competitiveness Index Human Development Index OECD-FDI Regulatory Restrictiveness Index Past Present 2023 Source: WB, WEF, Transparency International, OECD
  • Price Stability Source: TURKSTAT, Medium-Term Program 11 (CPiInflation,y/y,%) 107.2 125.5 99.1 6.2 5.3 5.0 5.0 0 20 40 60 80 100 120 140 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 Forecast
  • 10.8 7.9 4.1 0.1 -1.3 0.2 1.6 5.5 3.0 0.4 1.0 1.5 1.2 0.9 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Maastricht Criteria: 3% Medium-Term Program (2013-15) Achieved Maastricht Criteria except 2009 Source: Ministry of Development BudgetDeficit-to-GDP,% 12 Solid Fiscal Position
  • 74.0 67.7 59.6 52.7 46.5 39.9 40.0 46.1 42.3 39.1 36.2 35.0 33.0 31.0 30 35 40 45 50 55 60 65 70 75 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Medium-Term Program (2013-15) Lower Public Debt Debt-to-GDP,% Satisfying Maastricht Criteria since 2004 Maastricht Criteria: 60% Source: Treasury 13
  • 14 Source: Treasury 26.2 31.3 30.0 31.3 27.6 26.2 25.3 29.9 28.1 21.6 20.3 20.0 35.4 23.9 19.1 10.4 6.5 3.3 2.9 2.7 0.9 0.7 -3.3 -4.3 61.5 55.2 49.1 41.7 34.0 29.5 28.2 32.5 28.9 22.4 17.0 15.7 -10 0 10 20 30 40 50 60 70 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1 Net TL Net FX Total Net PublicSectorNetDebt(%,GDP) Public Sector Net Debt
  • 88.4 -62.3 -70 -60 -50 -40 -30 -20 -10 0 10 20 30 40 50 60 70 80 90 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1 Net Creditor in International Markets 15 Source: Treasury NetPublicExternalDebt(BillionTL)
  • Started banking sector stress tests in 2004 Introduced 12% target CAR since 2006 Limits on dividend distribution since 2008 A ban on HH FX borrowing since 2009 An LTV ratio of 75% on mortgages since 2011 General provisions increased in consumer loans in 2011 Macro-Prudential Framework 16
  • Challenges, Priories & Reform Agenda 17
  • C/A Deficit as a Source of Vulnerability 18
  • Current Account Deficit is Large, but (12MonthRolling,USDbn) Source: CBRT Manageable 19 -80 -60 -40 -20 0 20 40 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 Current Account Current Account without Energy Import Current Account + Net FDI + Net Errors and Omissions
  • We have… Flexible Exchange Rate Accumulated FX reserves Diversified Export Base Solid fiscal position Healthy banking sector Strong HH balance sheet & a dynamic real sector 20
  • 0 10 20 30 40 50 60 70 80 Flexible Exchange Rate 21 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. Volatility* Emerging Economies** Turkey
  • Accumulated FX Reserves 22 (Bn$) Source: CBRT 127.5 60 65 70 75 80 85 90 95 100 105 110 115 120 125 130 135 6/21/2007 9/21/2007 12/21/20… 3/21/2008 6/21/2008 9/21/2008 12/21/20… 3/21/2009 6/21/2009 9/21/2009 12/21/20… 3/21/2010 6/21/2010 9/21/2010 12/21/20… 3/21/2011 6/21/2011 9/21/2011 12/21/20… 3/21/2012 6/21/2012 9/21/2012 12/21/20… 3/21/2013 6/21/2013 o.w. $19.9 bn gold
  • 8 34 0 5 10 15 20 25 30 35 40 2002 2012 Diversified Export Markets Number of Export Markets over $1 billion Source: TURKSTAT 23
  • 9 30 0 5 10 15 20 25 30 35 2002 2012 Number of Products over $1 billion Diversified Product Bundle Source: TURKSTAT 24
  • Solid Fiscal Position 25 -10.3 -10.2 -8.5 -8.3 -7.7 -6.4 -5.6 -5.0 -4.9 -4.9 -4.6 -4.4 -4.1 -4.1 -4.0 -3.6 -3.5 -3.2 -3.0 -3.0 -3.0 -2.5 -2.5 -2.5 -1.9 -1.7 -1.0 -0.5 -0.4 -0.2 0.1 0.2 -12.0 -10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 Spain Japan United States United Kingdom Ireland Greece Cyprus Czech Republic Slovak Republic Portugal France Denmark Netherlands European Union Belgium Euro area Poland Slovenia Italy Malta Lithuania Austria Romania Hungary Luxembourg Finland TURKEY Bulgaria Sweden Estonia Latvia 1/4th of EU Average 1/6th of OECD Average 1/8th of US BudgetDeficit-to-GDP,%(2012) Source: iMF, EC, Ministry of Development
  • Well-Capitalized Banking SectorCapitalAdequacyRatio,% Target Rate 12% Legal Rate 8% Source: BRSA 26 Capital adequacy ratio twice the minimum legal limit of 8%. 17.3 0 5 10 15 20 25 30 35 2003-1 5 9 2004-1 5 9 2005-1 5 9 2006-1 5 9 2007-1 5 9 2008-1 5 9 2009-1 5 9 2010-1 5 9 2011-1 5 9 2012-1 5 9 2013-1
  • Banks are Solid & Profitable * Latest data, monthly Source: Banking Regulation and Supervision Agency, iMF ReturnonEquity*(%) 27 15.8 -35 -25 -15 -5 5 15 25 CzechRepublic Australia Canada Brazil TURKEY Germany Finland France UnitedStates Austria Japan Netherlands UnitedKingdom Belgium Denmark Italy Portugal Spain Greece NPLRatioofLoans(%) 2002 2013-4 17.6 3.0 2007-12 ROE in Turkish banks around 20%
  • Low Household Leverage Source: CBRT, ECB (HouseholdLiabilities,%ofGDP,2012) 28 65.5 21.2 0 20 40 60 80 100 120 140 160 Denmark Netherlands Ireland United Kingdom Portugal Sweden Spain Euro area Finland Greece Malta Germany France Belgium Luxembourg Austria Italy Estonia Poland Latvia Czech Republic Hungary Slovenia Slovakia Lithuania TURKEY Turkish HHs do not have FX exposure
  • Moderate Corporate Leverage 29 39.2 34.1 0 20 40 60 80 100 120 Luxembourg Spain Portugal Netherlands Ireland Denmark Italy Slovenia Austria Sweden Greece France TURKEY Latvia Estonia Germany Finland Average Belgium United Kingdom Hungary Lithuania Slovakia Czech Republic Poland (Corporateliabilities,%,GDP) Source: CBRT, Cetinkaya, March 2013, BRSA
  • ‹#›
  • -5 0 5 10 15 20 25 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Public Savings/GDP Private Savings/GDP (%) Source: Ministry of Development Savings 31
  • Priorities & Reform Agenda Reconciliation Process Enhancing Human Capital Stock Combatting Shadow Economy Improving Labor Market Flexibility Narrowing Regional Development Gaps Moving Up the Value Chain Deepening Capital Markets Improving Infrastructure Reducing Energy import Bill 32
  • 33 Reconciliation Process
  • Lost Decades 34 About 40,000 deaths About $350 billion spent on fighting terrorism Indirect cost is more than $1 trillion
  • Lost Decades OECD ülkeleri arasinda en yüksek 35 0 200 400 600 800 1000 1200 1400 1600 1800 2000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Korea Turkey 80s: at par w/ Korea 90s: Lost Decade AK Party: Rapid Growth GDP,million$ Source: IMF
  • Instead of Money Spent on Fighting Terrorism, we could have… 400,000 km dual carriageway 10,000 km high-speed rail line 3,000,000 classrooms 36
  • Turkey’s Political Transformation over the last Decade 37
  • Normalization & Democratization 38 Lifted “State of Emergency” Abolished State Security Courts Eliminated Immunity of those involved in Coup D'état’s Transformation of the National Security Council
  • Normalization & Democratization 39 Changed presidential election system Enacted Freedom of Information Act Created the Office of the National Ombudsman Improved legislation combatting corruption
  • Normalization & Democratization 40 Zero tolerance to torture No detention without court decision Acceptance of ECHR Judgments Established Department of Human Rights
  • Normalization & Democratization A compensation scheme for victims of terror Return of properties to non-muslim foundations Supremacy of international treaties on fundamental rights and freedoms Paved the way for individuals to lodge a complaint with ECHR 41
  • 42 41.4 42.3 47.5 47.2 48.9 41.8 38.9 34.6 28.3 27.9 23.3 20.9 10 15 20 25 30 35 40 45 50 55 60 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Rate of DetentionRateofDetentionperyear(%) Source: Ministry of Justice
  • Lifted Restrictions on Kurdish Language Media Education Political Campaigns State Courts 43
  • Freedom of Media 44
  • A Diverse and Vibrant Media Sector Radio Stations • 38 national • 98 regional • 923 local • 59 satellite 1,059 Radio Channels • 38 National • 98 Regional • 923 local 45 TV Stations • 24 national • 15 regional • 208 local • 177 satellite • 86 cable 510 TV Channels • 24 National • 15 Regional • 208 local • 177 satellite • 86 cable
  • Media Protection of Sources An end to confiscation of printing material Reformed Anti-Terror Law banning “printing or publishing declarations of terrorist organizations” 46
  • 47 Enhancing Human Capital Stock
  • Students (%, Total Population) 48 39 22 15 20 25 30 35 40 45 Turkey EU Source: TURKSTAT, Eurostat
  • 21 0 10 20 30 40 50 60 70 80 90 Germany France UnitedKingdom Italy Spain Poland Romania Turkey Netherlands Greece Belgium Portugal CzechRepublic Hungary Sweden Austria Switzerland Bulgaria Denmark Slovakia Finland Norway Ireland Croatia Lithuania Macedonia Slovenia Latvia Estonia Cyprus Montenegro Luxembourg Malta Iceland Liechtenstein Turkey’s Student Population 49Source: Ministry of Development, Eurostat Population,million
  • 9.4 17 8 10 12 14 16 18 2002 2013 Source: Ministry of Finance Share of Education Budget% 50
  • Investment in Education Over the last decade, we have • Built 188,000 classrooms • Hired 357,000 teachers 51 Source: Ministry of Education
  • Gross Schooling Rates Source: Ministry of Development 11.2 96.5 80.8 35.8 46.4 108.4 92.6 81.6 10 30 50 70 90 110 130 Preschool (age of 4-5 ) Primary School Secondary School Higher Education 2002-2003 2011-2012 52
  • Source: OECD, PiSA 2009 PISA Results - Mathematics 43rd (among 65 countries) 53 445 350 375 400 425 450 475 500 525 550
  • ‹#›
  • Improving Quality of Education With Fatih Project, we are providing our children with Broadband Internet Access Smart Boards Tablet PCs Other information Technology Tools 55
  • Source: OECD Fatih to help FURTHER reduce the Gap between Turkey & OECD (PISA Results) 56 30 40 50 60 70 80 science math 2006 2009
  • Combatting the Shadow Economy 57
  • Informal Employment 58 52.1 51.7 50.1 48.2 47.0 45.4 43.5 43.8 43.3 42.1 39.0 36.4 35 37 39 41 43 45 47 49 51 53 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013February Source:TURKSTAT (%,TotalEmployment)
  • Size of Shadow Economy (%, GDP) 32.2 31.5 30.7 30.4 29.1 28.4 28.9 28.3 27.7 27.2 26.5 26 27 28 29 30 31 32 33 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Schneider, 2013 59 Down 6 percentage points
  • Size of Shadow Economy (%, GDP) 31.2 28.4 28.4 28.0 27.6 26.5 25.5 25.2 24.3 23.8 23.6 23.1 22.1 21.1 19 18.6 18.5 16.4 15.5 15 13.9 13.6 13 13 13 12.2 9.9 9.7 9.1 8 7.6 7.1 5 10 15 20 25 30 35 Bulgaria Romania Crotia Lithuania Estonia TURKEY Latvia S.Cyprus Malta Poland Greece Slovenia Hungary Italy Portugal Spain Average Belgium CzechRep. SlovakRep. Sweeden Norway Denmark Finland Germany Ireland France UK Netherland Luxemburg Austria Switzerland Source: Schneider, 2013 60 But still higher than EU average
  • Tax Loss (% GDP) 7.8 7.3 7.4 7.5 7.5 7.1 6.8 6.3 5.7 5.3 5.3 5.7 3.6 3.4 3.4 3.4 3.5 3.4 3.3 3.1 2.9 2.6 2.5 2.8 2 3 4 5 6 7 8 9 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Turkey Sample Average 3ppt higher than the EU average Source: Schneider, 2012 61
  • Improving Labor Market Flexibility 62
  • Low Employment Rate Early retirement Low rate of female labor force participation Rigidities in labor force market 63
  • Average Retirement Age 41.0 44.9 61.9 63.3 30 35 40 45 50 55 60 65 Female Male Turkey OECD Source: OECD 64
  • Labor Participation Rate, Female OECD Average: 62.3 Source: TURKSTAT, OECD 65 LaborParticipationRatebyEducation (2013February) 29.6 16.1 24.8 32.1 39.4 73.0 10 20 30 40 50 60 70 80 Total Illeterate Less than high school High school Vocational high school Higher education
  • Improving Girls’ Education 2002 91.1 girls per 100 boys 2012 101.8 girls per 100 boys 66
  • Source: OECD Highest among OECD countries 67 Average Usual Weekly Hours Worked on the Main Job 48.9 30 32 34 36 38 40 42 44 46 48 50 Turkey Korea Mexico Greece Czech… Israel Slovak… Poland Iceland Slovenia Hungary Portugal Chile Canada Estonia Spain France Austria Italy NewZealand Finland Luxembourg Belgium Sweden United… Australia Germany Switzerland Ireland Norway Denmark Netherlands Highest among OECD countries
  • Narrowing Regional Development Gaps 68
  • New investment Incentive Scheme Objectives: - Reduce regional development gaps - Reduce current account deficit - Promote efficient allocation of resources to high value- added investments General Incentives Regional Incentives Incentives for Large-Scale Projects Incentives for Strategic Investments 69
  • YENİ TEŞVİK SİSTEMİ Regional  Customs Duty Exemption  VAT Exemption  Lower CIT rate  Support for the employer’s share of insurance premium  Allocation of Land  Customs Duty Exemption  VAT Exemption  Lower CIT rate  Support for the employer’s share of insurance premium  Allocation of Land  Interest Support  Customs Duty Exemption  VAT Exemption  Customs Duty Exemption  VAT Exemption  Lower CIT rate  Support for the employer’s share of insurance premium  Allocation of Land  Interest Support  VAT Rebate General In the 6th Region, additional support for  The employee’s share of insurance premium  Income tax stoppage Incentives Large-Scale Strategic 70
  • GAP (Southeastern Anatolia Project) Source: Southeastern Anatolia Project Administration, Ministry of Development, 2007 employment 1.2 million 2011 employment 1.6 million 1.3 million jobs will be created $6.6 billion annual contribution to the economy 71
  • DAP (Eastern Anatolia Project) Source: Southeastern Anatolia Project Administration, Ministry of Development, DAP will help Create 1.2 million jobs Contribute $1.4 billion to the economy 72
  • 73 Moving Up the Value Chain
  • Why is R&D so significant for us? The share of high and medium-high technology sectors in production and in export is low Boosting R&D Source: Ministry of Development 27.6 72.4 35.6 64.4 0 10 20 30 40 50 60 70 80 High and Medium-High Low and Medium-Low Production Export 74
  • Source: The Scientific and Technological Council of Turkey R&D Spending 75 • 3.00%2023 • 0.86%2011 • 0.53%2002
  • Industrial Design Applications 41,226 applications in 2012 Up by 103% since 2002 Source: TPi 76
  • Trade Mark Applications Source: TPi • 36,578 2002 • 109,767 2012 77
  • Patent Applications Source: TPi 78 1,874 11,555 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 2002 2012
  • 79 Deepening Capital Markets
  • A New Capital Markets Law •Increasing financial deepening & innovation •Strengthening investor rights •Improving corporate governance New legal framework in line with the best global practices 80
  • Restructuring of Borsa Istanbul Regional Leadership Raising Market Cap/GDP to 80% 1,000 new companies to be listed 81
  • Increasing Savings: Private Pensions 25% State Contribution Penalty for Early Withdrawals 82
  • incentives for Global Fund Managers A tax free environment for Global Funds Making it easier to manage assets in Turkey 83
  • 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 84
  • Incentives for Business Angels 85
  • Developing Sukuk Market Similar to euro bonds, international holders Sukuk will not be subject to withholding tax Sep-12: First Sukuk issued for $1.5bn in international market Oct-12: Sukuk denominated in TL issued for TL1.6bn in domestic market Feb-13: Sukuk issued for TL1.5bn 86
  • 87 Improving Infrastructure
  • 1,714 Km Total of Motorways 4,387 Km Total of State and Provincial Dual Carriageways Total: 6,101 Km Dual Carriageway Network (January 1, 2003) 2,244 Km Total of Motorways 20,017Km Total of State and Provincial Dual Carriageways Total: 22,261 Km Dual Carriageway Network (May 11, 2013) 88
  • İSTANBUL ESKİŞEHİR POLATLi ANKARA KONYA SİVAS 212 km 533 km 405 km YOZGAT Yerköy AFYON İZMİR MANİSA 624 km BURSA BİLECİK 105 km Under Construction Completed High Speed Railway Projects 89Source: Ministry of Transport
  • • The number of airports serving scheduled flights = 262003 • The number of airports serving scheduled flights = 492012 Airports Available For Civil Aviation Traffic in Turkey Airports serving Scheduled Flights (49) Airports under Construction (6) Airports Planned (1) 90
  • 91 Reducing Energy import Bill
  • Source: TURKSTAT, Bloomberg Energy Import Bill (Brent,$pbl) EnergyImports(BillionDollars) 92 9.2 60.1 58.4 0 20 40 60 80 100 120 0 10 20 30 40 50 60 70 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013May Enerji İthalatı (Milyar $) Petrol Fiyatları ($)
  • High Dependence on Energy Imports 72% Total Energy 92% Oil 98% Natural-Gas 93
  • Developing Local & Renewable Resources Source: Ministry of Energy and Natural Resources Electricity Generation Installed Capacity MW % of Total Current installed Capacity (Sept, 2012) 55,663 - Renewable Energy 20,963 37.7 Power Plants Under Construction 23,396 - Renewable Energy 15,879 67.9 TOTAL 79,029 - Renewable Energy 36,843 46.6 94
  • Wind Power Capacity 2002 2012 In terms of wind power capacity, Turkey ranked 11th in 2012 in Europe while it had ranked 35th in 2002. 35. 11. Source: EWEA 95
  • Building the Nuclear Capacity 96 Akkuyu: JW with Russia Sinop JW with a Japanese-French consortium Working on a 3rd plant
  • Improving Energy Efficiency 97 Industry 20% Transportation 15% Construction 30%
  • Privatization • Distributions: Almost done 98 Hamitabat Termal Power Plant Seyitömer Termal Power Plant Kangal Termal Power Plant • Generation: 16,530MW on sale
  • Coal 99 $12 Billion Investment 85 million tons of coal per year 45 billion kWh of energy per year Employment for 15 thousand people Turkey-UAE
  • Other Factors Supporting Growth Urban Renewal 2B Removal of Reciprocity incentives IG Credit Ratings Reconciliation Process 100
  • Turkey’s Strong Long-Term Prospects 101
  • GDP Source: TURKSTAT, MTP, PwC 2002 2050 2002 $ 230 billion 2050 $ 5 trillion 2012 $ 786 billion 2023 $ 2 trillion 102
  • GDP per Capita Source: TURKSTAT, MTP,PwC 2002 2050 2002 $ 3,492 2012 $10,504 2023 $ 25,000 2050 $ 50,000 103
  • Unemployment 10.3 9.2 8.9 7.2 5.0 4 5 6 7 8 9 10 11 2002 2012 2013 2018 2023 Source: TURKSTAT, MTP, Development Plan UnemploymentRate(%) 0.9 pts 1.2 pts 2.2 pts 104
  • Exports 105 (Bn$) Kaynak: TURKSTAT, MTP, Development Plan 36 152 158 277 500 0 100 200 300 400 500 600 2002 2012 2013 2018 2023
  • Fiscal DeficitGen.Gov’tBudgetDeficit-to-GDP,% Source: Ministry of Development, MTP, Development Plan 10.8 1.0 1.5 0.5 0 2 4 6 8 10 12 2002 2012 2013 2018 10 ppts 1 ppt 106
  • Determinants of Long-Term Growth Quality of Institutions Demographics Productivity 107
  • Improving Quality of Institutions Combatting corruption Creating a level playing field Improving international competitiveness 108
  • Corruption Perceptions Index (2002) (65th among 102 countries) 31 44 45 58 59 65 70 73 74 96 20 30 40 50 60 70 80 90 100 Italy Greece Brazil Mexico China TURKEY Argentina India Russia Indonesia Source: Transparency International 109
  • Corruption Perceptions Index (2012) (54th among 176 countries) Source: Transparency International 54 69 72 80 94 94 102 105 118 133 40 50 60 70 80 90 100 110 120 130 140 TURKEY Brazil Italy China Greece India Argentine Mexico Indonesia Russia 110
  • Within the period of 2005-2012, Turkey has ranked higher than Russia, Argentina and Greece.(71st among 117 countries) 38 45 47 48 53 54 57 59 69 71 30 35 40 45 50 55 60 65 70 75 Italy India Greece China Russia Argentina Brazil Mexico Indonesia TURKEY Source: World Economic Forum Global Competitiveness Index (2005) 111
  • (43rd among 144 countries) Source: World Economic Forum Global Competitiveness Index (2012) 29 41 42 43 48 49 50 53 59 60 67 71 73 78 94 20 30 40 50 60 70 80 90 100 China Poland Italy TURKEY Brazil Portugal Indonesia Mexico India Hungary Russia Slovak Republic Ukraine Romania Argentina Moved up 16 places in a year 2nd fastest rising country 112
  • (84th among 175 countries) Source: World Bank Ease of Doing Business (2006) 62 69 70 71 84 93 97 108 111 122 131 138 60 70 80 90 100 110 120 130 140 Mexico Italy Uruguay Romania TURKEY Argentina Russia China Greece Brazil Indonesia India 113
  • (71st among 185 countries) Source: World Bank Ease of Doing Business (2012) 48 71 72 73 78 84 89 91 112 124 128 130 132 137 20 40 60 80 100 120 140 Mexico TURKEY Romania Italy Greece Crotia Uruguay China Russia Argentina Indonesia Brazil India Ukraine 114
  • Favorable Demographics Source: Eurostat Shareof15-24yearsoldinTotalPop.(%) 16.8 7 9 11 13 15 17 19 21 Andorra Italy Greece Spain Portugal Germany Slovenia Ireland Bulgaria Luxembourg Switzerland Croatia Czech Republic Austria Liechtenstein Serbia Hungary Netherlands Finland France Denmark United Kingdom Norway Sweden Estonia Ukraine Malta Poland Latvia Slovakia Montenegro Lithuania Iceland Macedonia Georgia Turkey Moldova Azerbaijan 115
  • AnnualAveragePopulationGrowthRate (%,2001-11)Growth Rate of Working-Age Population Source: OECD, Eurostat, TURKSTAT 116 2.0 1.0 0.7 0.3 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Turkey USA OECD EU-27
  • Have Investors noticed the Transformation? 117
  • International Companies Operating in Turkey (1000s) Source: Ministry of Economy 118 5.6 6.7 8.8 11.7 15.0 16.1 19.2 21.9 25.2 29.9 33.4 33.8 0 5 10 15 20 25 30 35 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Apr
  • Foreign Direct Investment Inflows Source: CBRT (Billiondollar) 14.8 122.8 0 20 40 60 80 100 120 140 1980-2002 2003-2012 119
  • REER Appreciation Source: CBRT (2003=100) 120 55 65 75 85 95 105 115 125 135 1989-1 7 1990-1 7 1991-1 7 1992-1 7 1993-1 7 1994-1 7 1995-1 7 1996-1 7 1997-1 7 1998-1 7 1999-1 7 2000-1 7 2001-1 7 2002-1 7 2003-1 7 2004-1 7 2005-1 7 2006-1 7 2007-1 7 2008-1 7 2009-1 7 2010-1 7 2011-1 7 2012-1 7 2013-1 Linear Trend
  • THANK YOU… 121