Financing Sustainable Growth
IFS
September 19 , 2013
Mehmet Şimşek
Minister of Finance
Outline
2
Growth: Next Decade & Beyond
Map for Sustainable Growth
• Short-Term
• Long-Term
Determinants of Long-Term Growt...
GDP Per Capita
1,099
1,142
1,233
1,320
1,394
1,442 1,434
1,346
1,450
1,557
1,572
1,000
1,100
1,200
1,300
1,400
1,500
1,600...
Real Convergence with Advanced EconomiesIncomePerCapita(PPP,%)
Source: IMF, OECD, TURKSTAT
4
23.4
36.436.9
56.8
20
25
30
3...
Growth: Next Decade & Beyond
5
GDP
Source: TURKSTAT, Medium-Term Program,PwC
2002
2050
2002
$ 230
billion
2050
$ 5 trillion
2012
$ 786 billion
2023
$ 2 t...
GDP per Capita
Source: TURKSTAT, Medium-Term Program,PwC
2002
2050
2002
$ 3,492
2012
$10,497
2023
$ 25,000
2050
$ 50,000
7
Ambitious Targets
Source: IMF, PricewaterhouseCoopers
1. USA
2. China
3. India
4. Japan
5. Germany
6. Russia
8. UK
7. Braz...
Average Real GDP Growth Rates
9
Source: Turkstat, Ministry of Development
4.5
3.1
5.1
5.5
2
3
4
5
6
1924-2002 1993-2002 20...
10
Road Map for Sustainable Growth
11
Short-Term
Financing of Growth in the Short-Term
Growing at a
moderate rate
No boom-bust
cycles
Real GDP
100.0
118.4
85
90
95
100
105
110
115
120
2007-Q1
Q2
Q3
Q4
2008-Q1
Q2
Q3
Q4
2009-Q1
Q2
Q3
Q4
2010-Q1
Q2
Q3
Q4
2011...
14
Supported by Job-CreationEmploymentsinceend-2007
(MnPeople,s.a.)
Source:TURKSTAT
25.6
20
21
22
23
24
25
26
2008-1
2009-...
Supported by Sound Macro Fundamentals
Low Deficit Low & Declining
Public Debt
Healthy Banking
System
Low Household
Leverag...
Low Deficit
10.8
7.9
4.1
0.1
-1.3
0.2
1.6
5.5
3.0
0.4
1.0
1.4 1.2 0.9
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2002 2003 2004 20...
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 20...
Healthy Banking System
* Latest data, monthly
Source: Banking Regulation and Supervision Agency, IMF
18
2002 2013-7
17.6
2...
Low Household Leverage
Source: CBRT, ECB
(HouseholdLiabilities,%ofGDP,2012)
19
65.5
21.2
0 20 40 60 80 100 120 140 160
Den...
Moderate Corporate Leverage
20
39.2
34.1
0 20 40 60 80 100 120
Luxembourg
Spain
Portugal
Netherlands
Ireland
Denmark
Italy...
8
34
0
5
10
15
20
25
30
35
40
2002 2012
Diversified Export Markets
Number of Export Markets over $1 billion
Source: TURKST...
9
30
0
5
10
15
20
25
30
35
2002 2012
Number of Products over $1 billion
Diversified Product Bundle
Source: TURKSTAT
22
0
10
20
30
40
50
60
70
80
01/2006
04/2006
07/2006
10/2006
01/2007
04/2007
07/2007
10/2007
01/2008
04/2008
07/2008
10/2008
...
Financing of Growth in the Short-Term
• Maintaining flows into equity & bond markets
• Maintaining Long-Term financing
• I...
Increasing Savings: Private Pensions
25% State Contribution
Penalty for Early
Withdrawals
25
Incentives for Business Angels
26
Incentives for Venture Capital
Allowing contributions to Venture Capital to be
deducted from Corporate & Personal Income T...
Incentives for Global Fund Managers
A tax free environment for
Global Funds
Making it easier to manage assets
in Turkey
28
Sukuk
Similar to eurobonds, internat’l holders aren’t subject to w/holding tax
Sep-12: 1st Sukuk issued for $1.5bn in inte...
Long-Term Financing of Sustainable
Growth
30
Raising Domestics Savings
31
-5
0
5
10
15
20
25
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Public Savings/GDP Private Savings/GDP
(%)
Sourc...
Determinants of Savings
Propensity to Save
Deepening Capital Markets Increasing Energy Efficiency
Productivity
Moving Up t...
34
Enhancing Human Capital Stock
Students (%, Total Population)
35
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
...
9.4
17
8
10
12
14
16
18
2002 2013
Source: Ministry of Finance
Share of Education Budget%
37
Investment in Education
Over the last
decade, we have
• Built 188,459
classrooms
• Hired 395,144 teachers
38
Source: Minis...
Gross Schooling Rates
Source: Ministry of Development
11.2
96.5
80.8
35.8
44.0
107.6
96.8
81.6
10
30
50
70
90
110
130
Pres...
Source: OECD, PISA 2009
PISA Results - Mathematics
43rd (among 65 countries)
40
445
350
375
400
425
450
475
500
525
550
Source: OECD, PISA 2009
PISA Results - Science
43rd (among 65 countries)
41
454
350
370
390
410
430
450
470
490
510
530
55...
Improving Quality of Education
With Fatih Project, we are providing our children with
Broadband Internet Access
Smart Boar...
Source: OECD
Fatih to help FURTHER reduce the Gap between Turkey & OECD
(PISA Results)
43
30
40
50
60
70
80
science math
2...
Improving Labor Market Flexibility
44
Labor Participation Rate is rising
51.0
45
46
47
48
49
50
51
52 2008-1
3
5
7
9
11
2009-1
3
5
7
9
11
2010-1
3
5
7
9
11
2011...
Low Employment Rate
Early retirement
Low rate of female labor
force participation
Rigidities in labor force
market
46
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
47
Labor Participation Rate, Female
OECD Average: 62.3
Source: TURKSTAT, OECD
48
LaborParticipationRatebyEducation
(2013June)...
Improving Girls’ Education
2002
91.1 girls per
100 boys
2012
101.8 girls
per 100 boys
49
Source: OECD
Highest among OECD countries
50
Average Usual Weekly Hours Worked on the Main Job
48.9
30
32
34
36
38
40
42
4...
51
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
...
Source: The Scientific and Technological Council of Turkey
R&D Spending
53
• 3.00%2023
• 0.86%2011
• 0.53%2002
Industrial Design Applications
41,226 applications in 2012
Up by 103% since 2002
Source: TPI
54
Trade Mark Applications
Source: TPI
• 36,578
2002
• 109,767
2012
55
Patent Applications
Source: TPI
56
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...
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
37.8
35
37
39
41
43
45
47
49
51
53
2002
2003...
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
2...
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...
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...
62
Deepening Capital Markets
A New Capital Markets Law
•Increasing financial deepening & innovation
•Strengthening investor rights
•Improving corporate...
Restructuring of Borsa Istanbul
Regional
Leadership
Raising
Market
Cap/GDP to
80%
1,000 new
companies
to be listed
64
Free-floats
Most Turkish companies are privately owned
Source: TSPAKB, CMB
70
30
10
20
30
40
50
60
70
80
EM Average Turkey...
66
Increasing Energy Efficiency
Source: TURKSTAT, Bloomberg
Energy Import Bill
(Brent,$pbl)
EnergyImports(BillionDollars)
67
9.2
60.1 57.9
0
20
40
60
80
1...
High Dependence on Energy Imports
72%
Total Energy
92%
Oil
98%
Natural-Gas
68
Developing Local & Renewable Resources
Source: Ministry of Energy and Natural Resources
Electricity Generation Installed C...
Building the Nuclear Capacity
70
Akkuyu:
JW with Russia
Sinop
JW with a Japanese-French consortium
Working on a 3rd plant
Improving Energy Efficiency
71
Industry
20%
Transportation
15%
Construction
30%
Privatization
• Distributions: Almost done
72
Hamitabat Termal Power Plant
Seyitömer Termal Power Plant
Kangal Termal Powe...
Determinants of Long-Term Growth
Quality of Institutions
Demographics
Productivity
73
Improving Quality of Institutions
Doing Business
Corruption
Perception Index
Global
Competitiveness
Index
Human
Developmen...
Favorable Demographics
Source: Eurostat
Shareof15-24yearsoldinTotalPop.(%)
16.8
7 9 11 13 15 17 19 21
Andorra
Italy
Greece...
2.0
1.0
0.3
0.7
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Turkey USA EU-27 OECD
AnnualAveragePopulationGrowthRate
(%,2001-11...
How is Turkey Positioned?
77
International Companies Operating in Turkey
(1000s)
Source: Ministry of Economy
78
5.6
6.7
8.8
11.7
15.0
16.1
19.2
21.9
25...
Foreign Direct Investment Inflows
Source: CBRT
(Billiondollar)
14.8
122.8
0
20
40
60
80
100
120
140
1980-2002 2003-2012
79
REER Appreciation
Source: CBRT
(2003=100)
80
55
65
75
85
95
105
115
125
135
1989-1
7
1990-1
7
1991-1
7
1992-1
7
1993-1
7
1...
THANK YOU…
81
Upcoming SlideShare
Loading in …5
×

Financing Sustainable Growth 19.09.2013

382 views

Published on

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
382
On SlideShare
0
From Embeds
0
Number of Embeds
17
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Financing Sustainable Growth 19.09.2013

  1. 1. Financing Sustainable Growth IFS September 19 , 2013 Mehmet Şimşek Minister of Finance
  2. 2. Outline 2 Growth: Next Decade & Beyond Map for Sustainable Growth • Short-Term • Long-Term Determinants of Long-Term Growth • How is Turkey positioned?
  3. 3. GDP Per Capita 1,099 1,142 1,233 1,320 1,394 1,442 1,434 1,346 1,450 1,557 1,572 1,000 1,100 1,200 1,300 1,400 1,500 1,600 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Real GDP Per Capita 8,662 8,798 10,166 11,389 12,888 13,899 15,022 14,417 15,777 17,037 18,186 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 GDP Per Capita (PPP)
  4. 4. Real Convergence with Advanced EconomiesIncomePerCapita(PPP,%) Source: IMF, OECD, TURKSTAT 4 23.4 36.436.9 56.8 20 25 30 35 40 45 50 55 60 2002 2012 Turkey / USA Turkey /European Union
  5. 5. Growth: Next Decade & Beyond 5
  6. 6. GDP Source: TURKSTAT, Medium-Term Program,PwC 2002 2050 2002 $ 230 billion 2050 $ 5 trillion 2012 $ 786 billion 2023 $ 2 trillion 6
  7. 7. GDP per Capita Source: TURKSTAT, Medium-Term Program,PwC 2002 2050 2002 $ 3,492 2012 $10,497 2023 $ 25,000 2050 $ 50,000 7
  8. 8. Ambitious Targets Source: IMF, PricewaterhouseCoopers 1. USA 2. China 3. India 4. Japan 5. Germany 6. Russia 8. UK 7. Brazil 9. France 10. Italy 11. Mexico 12. South Korea 13. Canada 14. Spain 15. Indonesia 16. TURKEY 17. Iran 18. Australia 19. Saudi Arabia 20. Taiwan 2012 (GDP-PPP) Target Top 10 in the World Top 3 in Europe 6th in Europe 16th in the World 8
  9. 9. Average Real GDP Growth Rates 9 Source: Turkstat, Ministry of Development 4.5 3.1 5.1 5.5 2 3 4 5 6 1924-2002 1993-2002 2003-2012 2014-2018 % Reforms to increase potential growth
  10. 10. 10 Road Map for Sustainable Growth
  11. 11. 11 Short-Term
  12. 12. Financing of Growth in the Short-Term Growing at a moderate rate No boom-bust cycles
  13. 13. Real GDP 100.0 118.4 85 90 95 100 105 110 115 120 2007-Q1 Q2 Q3 Q4 2008-Q1 Q2 Q3 Q4 2009-Q1 Q2 Q3 Q4 2010-Q1 Q2 Q3 Q4 2011-Q1 Q2 Q3 Q4 2012-Q1 Q2 Q3 Q4 2013-Q1 Q2 RealGDP(2007Q4=100,s.a.) Source: Turkstat
  14. 14. 14 Supported by Job-CreationEmploymentsinceend-2007 (MnPeople,s.a.) Source:TURKSTAT 25.6 20 21 22 23 24 25 26 2008-1 2009-1 2010-1 2011-1 2012-1 2013-1
  15. 15. Supported by Sound Macro Fundamentals Low Deficit Low & Declining Public Debt Healthy Banking System Low Household Leverage Moderate Corporate Leverage Diversified Export Markets A Flexible Exchange Rate
  16. 16. Low Deficit 10.8 7.9 4.1 0.1 -1.3 0.2 1.6 5.5 3.0 0.4 1.0 1.4 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,% 16
  17. 17. 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 17
  18. 18. Healthy Banking System * Latest data, monthly Source: Banking Regulation and Supervision Agency, IMF 18 2002 2013-7 17.6 2.8 NPLRatioofLoans(%) CapitalAdequacyRatio,% 15.93 0 5 10 15 20 25 30 35 2003-1 8 3 10 5 12 7 2 9 4 11 6 2010-1 8 3 10 5 12 7 Target Rate 12% Legal Rate 8%
  19. 19. Low Household Leverage Source: CBRT, ECB (HouseholdLiabilities,%ofGDP,2012) 19 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
  20. 20. Moderate Corporate Leverage 20 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, BRSA
  21. 21. 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 21
  22. 22. 9 30 0 5 10 15 20 25 30 35 2002 2012 Number of Products over $1 billion Diversified Product Bundle Source: TURKSTAT 22
  23. 23. 0 10 20 30 40 50 60 70 80 01/2006 04/2006 07/2006 10/2006 01/2007 04/2007 07/2007 10/2007 01/2008 04/2008 07/2008 10/2008 01/2009 04/2009 07/2009 10/2009 01/2010 04/2010 07/2010 10/2010 01/2011 04/2011 07/2011 10/2011 01/2012 04/2012 07/2012 10/2012 01/2013 04/2013 07/2013 A Flexible Exchange Rate 23 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
  24. 24. Financing of Growth in the Short-Term • Maintaining flows into equity & bond markets • Maintaining Long-Term financing • Increasing FDI Continuing to tap into global savings • Private Pension Scheme • Financing start-ups Boosting domestic savings
  25. 25. Increasing Savings: Private Pensions 25% State Contribution Penalty for Early Withdrawals 25
  26. 26. Incentives for Business Angels 26
  27. 27. 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 27
  28. 28. Incentives for Global Fund Managers A tax free environment for Global Funds Making it easier to manage assets in Turkey 28
  29. 29. Sukuk Similar to eurobonds, internat’l holders aren’t subject to w/holding tax Sep-12: 1st Sukuk issued for $1.5bn in international market Oct-12: 2nd Sukuk denominated in TL issued for TL1.6bn Feb-13: 3rd Sukuk issued for TL1.5bn Aug-13: 4th Sukuk issued for TL1.8bn 29
  30. 30. Long-Term Financing of Sustainable Growth 30
  31. 31. Raising Domestics Savings 31
  32. 32. -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 32
  33. 33. Determinants of Savings Propensity to Save Deepening Capital Markets Increasing Energy Efficiency Productivity Moving Up the Value Chain Combatting Shadow Economy Income Ratios Improving Labor Market Flexibilty Demographics Enhancing Human Capital Stock
  34. 34. 34 Enhancing Human Capital Stock
  35. 35. Students (%, Total Population) 35 39 22 15 20 25 30 35 40 45 Turkey EU Source: TURKSTAT, Eurostat
  36. 36. 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 36Source: Ministry of Development, Eurostat Population,million
  37. 37. 9.4 17 8 10 12 14 16 18 2002 2013 Source: Ministry of Finance Share of Education Budget% 37
  38. 38. Investment in Education Over the last decade, we have • Built 188,459 classrooms • Hired 395,144 teachers 38 Source: Ministry of Education
  39. 39. Gross Schooling Rates Source: Ministry of Development 11.2 96.5 80.8 35.8 44.0 107.6 96.8 81.6 10 30 50 70 90 110 130 Preschool (age of 4-5 ) Primary School Secondary School Higher Education 2002-2003 2012-2013 39
  40. 40. Source: OECD, PISA 2009 PISA Results - Mathematics 43rd (among 65 countries) 40 445 350 375 400 425 450 475 500 525 550
  41. 41. Source: OECD, PISA 2009 PISA Results - Science 43rd (among 65 countries) 41 454 350 370 390 410 430 450 470 490 510 530 550 Korea Estonia Germany Liechtenstein Slovenia Poland Hungary France İtaly Croatia Russia Greece Turkey Bulgaria Mexico Brazil Argentina Indonesia
  42. 42. Improving Quality of Education With Fatih Project, we are providing our children with Broadband Internet Access Smart Boards Tablet PCs Other Information Technology Tools 42
  43. 43. Source: OECD Fatih to help FURTHER reduce the Gap between Turkey & OECD (PISA Results) 43 30 40 50 60 70 80 science math 2006 2009
  44. 44. Improving Labor Market Flexibility 44
  45. 45. Labor Participation Rate is rising 51.0 45 46 47 48 49 50 51 52 2008-1 3 5 7 9 11 2009-1 3 5 7 9 11 2010-1 3 5 7 9 11 2011-1 3 5 7 9 11 2012-1 3 5 7 9 11 2013-1 3 5 LaborParticipationRate (%,s.a.) Source:TURKSTAT OECD Average: 70.9
  46. 46. Low Employment Rate Early retirement Low rate of female labor force participation Rigidities in labor force market 46
  47. 47. 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 47
  48. 48. Labor Participation Rate, Female OECD Average: 62.3 Source: TURKSTAT, OECD 48 LaborParticipationRatebyEducation (2013June) 31.9 18.8 27.8 32.6 41.5 71.6 10 20 30 40 50 60 70 80 Total Illeterate Less than high school High school Vocational high school Higher education
  49. 49. Improving Girls’ Education 2002 91.1 girls per 100 boys 2012 101.8 girls per 100 boys 49
  50. 50. Source: OECD Highest among OECD countries 50 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 CzechRepublic Israel SlovakRepublic Poland Iceland Slovenia Hungary Portugal Chile Canada Estonia Spain France Austria Italy NewZealand Finland Luxembourg Belgium Sweden UnitedKingdom Australia Germany Switzerland Ireland Norway Denmark Netherlands Highest among OECD countries
  51. 51. 51 Moving Up the Value Chain
  52. 52. 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 52
  53. 53. Source: The Scientific and Technological Council of Turkey R&D Spending 53 • 3.00%2023 • 0.86%2011 • 0.53%2002
  54. 54. Industrial Design Applications 41,226 applications in 2012 Up by 103% since 2002 Source: TPI 54
  55. 55. Trade Mark Applications Source: TPI • 36,578 2002 • 109,767 2012 55
  56. 56. Patent Applications Source: TPI 56 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
  57. 57. Combatting the Shadow Economy 57
  58. 58. 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 37.8 35 37 39 41 43 45 47 49 51 53 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013June Source:TURKSTAT (%,TotalEmployment)
  59. 59. 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
  60. 60. 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
  61. 61. 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
  62. 62. 62 Deepening Capital Markets
  63. 63. 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 63
  64. 64. Restructuring of Borsa Istanbul Regional Leadership Raising Market Cap/GDP to 80% 1,000 new companies to be listed 64
  65. 65. Free-floats Most Turkish companies are privately owned Source: TSPAKB, CMB 70 30 10 20 30 40 50 60 70 80 EM Average Turkey %
  66. 66. 66 Increasing Energy Efficiency
  67. 67. Source: TURKSTAT, Bloomberg Energy Import Bill (Brent,$pbl) EnergyImports(BillionDollars) 67 9.2 60.1 57.9 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 2013July Energy Import Oil Prices
  68. 68. High Dependence on Energy Imports 72% Total Energy 92% Oil 98% Natural-Gas 68
  69. 69. 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 69
  70. 70. Building the Nuclear Capacity 70 Akkuyu: JW with Russia Sinop JW with a Japanese-French consortium Working on a 3rd plant
  71. 71. Improving Energy Efficiency 71 Industry 20% Transportation 15% Construction 30%
  72. 72. Privatization • Distributions: Almost done 72 Hamitabat Termal Power Plant Seyitömer Termal Power Plant Kangal Termal Power Plant • Generation: 16,530MW on sale
  73. 73. Determinants of Long-Term Growth Quality of Institutions Demographics Productivity 73
  74. 74. Improving Quality of Institutions 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 74
  75. 75. 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 75
  76. 76. 2.0 1.0 0.3 0.7 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Turkey USA EU-27 OECD AnnualAveragePopulationGrowthRate (%,2001-11)Growth Rate of Working-Age Population Source: OECD, Eurostat, TURKSTAT 76
  77. 77. How is Turkey Positioned? 77
  78. 78. International Companies Operating in Turkey (1000s) Source: Ministry of Economy 78 5.6 6.7 8.8 11.7 15.0 16.1 19.2 21.9 25.2 29.6 33.8 34.5 0 5 10 15 20 25 30 35 40 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jun
  79. 79. Foreign Direct Investment Inflows Source: CBRT (Billiondollar) 14.8 122.8 0 20 40 60 80 100 120 140 1980-2002 2003-2012 79
  80. 80. REER Appreciation Source: CBRT (2003=100) 80 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 7 Linear Trend
  81. 81. THANK YOU… 81

×