BAML 
Turkey Investment Conference
January 2013
Mehmet Şimşek
Minister of Finance
Outlook for Turkish Economy
2
Strong Post‐Crisis Recovery, but
Growth has Moderated
Source: TURKSTAT
Real GDP  (s.a, 2007Q4=100)
3
96.1
100.0
88.1
114.2...
Soft Landing 
Growing 
Economy
Narrowing 
Current Account
Deficit
Declining 
Inflation
Lower 
Unemployment
Falling 
Public...
Rebalancing is largely doneContribution to Growth, ppt
Source: TURKSTAT
5
17.6
14.2
7.9
1.9
‐1.3
‐2.9
‐1.8
‐5.6
‐5.1
0.5
3...
Unemployment Rate (%)
Source: TURKSTAT
9.3
9.1
7
8
9
10
11
12
13
14
15
16
17 2008‐1
2009‐1
2010‐1
2011‐1
2012‐1
Seasonally...
Inflation Rate (y/y, %)
Source: TURKSTAT
6.2
4
8
12
16
20
24
28
32
2003‐1
5
9
2004‐1
5
9
2005‐1
5
9
2006‐1
5
9
2007‐1
5
9
...
Current Account Balance
(12 MonthRolling, USD bn)
‐52
8
‐34.9
‐80
‐70
‐60
‐50
‐40
‐30
‐20
‐10
0
10
20
2002‐1
4
7
10
2003‐1...
Gold Effect?
Source: Central Bank of Turkey
(12 MonthRolling, USD bn)
‐110
‐100
‐90
‐80
‐70
‐60
‐50
‐40
‐30
‐20
‐10
0
10
2...
Financing of the Current Account Deficit
Source: Central Bank of Turkey
(12 MonthRolling, USD bn)
‐10
0
10
20
30
40
50
60
...
Rising Reserves(CBRT Total Reserves, USD bn)
55
60
65
70
75
80
85
90
95
100
105
110
115
120
125 1/4/2007
4/4/2007
7/4/2007...
Real Effective Exchange RateCPI ‐Developing Countries ‐Based REER 
(2003=100)
85
90
95
100
105
110
115
120
125 2003-1
4
7
...
Europe
%56.6
Other
%43.4
Exports 2002
Fallout from the EU Crisis
Europe
%38,8
Other
%62,2
Exports Jan‐Nov 2012
13
Source: ...
MENA Region—A Savior
Share of MENA in total exports(%)
12.1
31.8
5
10
15
20
25
30
35
2002 2012
Jan‐Nov
14
Source: TURKSTAT
Export to MENA and EU‐27
(2007=100, 3‐Month Moving Average)
Source: TURKSTAT
60
120
180
240
300
360
2007-1
3
5
7
9
11
2008...
8
32
0
5
10
15
20
25
30
35
2000 2011
Export Diversification ‐ I
Number of Products over $1 billion
16
Source: TURKSTAT
5
30
0
5
10
15
20
25
30
35
2000 2011
Number of Export Markets over $1 billion
Export Diversification ‐II
17
Source: TURKST...
Share of Largest Five in Total Exports (%)
Top Export Markets (%, USD bn)
2002 2011
Germany $5,9 Germany $14,0
USA $3,4 US...
Overstating Current Account Deficit
Reference Price Practice by the Customs
Difficulties in estimating tourism revenues
19
Stronger Growth in 2013
20
Outlook for 2013 
Faster Growth
Slight Increase in 
C/A Deficit
Declining 
Inflation
Lower 
Unemployment
Falling 
Public D...
PMI & Manufacturing Index
Source:CBT, HSBC
90
95
100
105
110
115
120
125
130
135
30
35
40
45
50
55
60
2007‐1
4
7
10
2008‐1...
Consumer & Real Sector Confidence Index
Source: CBT, TURKSTAT
65
70
75
80
85
90
95
100
50
60
70
80
90
100
110
120
130
2007...
Looser Monetary Policy( %)
Source: CBRT
24
5.00
9.00
5.75
4
5
6
7
8
9
10
11
12
13
14
October 11
October 11
December 11
Dec...
Falling Lending Rates( %)
25
8
10
12
14
16
18
20
22
24
26 1/4/2008
3/4/2008
5/4/2008
7/4/2008
9/4/2008
11/4/2008
1/4/2009
...
Credit Growth
26
* Credit Growth is adjusted for exchange rate movements
Source: CBRT
13 week moving avg., y‐on‐y %
19
0
5...
Employment is Supportive of Growth
Source:TURKSTAT
20
21
22
23
24
25
2008‐1
2009‐1
2010‐1
2011‐1
2012‐1
27
Employment  sin...
Strong Job Creation
28
3.9
‐5.0
‐4.0
‐3.0
‐2.0
‐1.0
0.0
1.0
2.0
3.0
4.0
5.0 Ireland
Spain
Greece
Iceland
Denmark
Estonia
P...
80
100
120
140
160
180
200
220
2008‐1
2009‐1
2010‐1
2011‐1
2012‐1
USA
EU‐27
Turkey
Unemployment at Decade LowUnemployment ...
Other Factors
30
Urban Renewal  
Sale of 2B Land
Removal of 
Reciprocity
Investment 
Grade Rating
Sound Fiscal Position
31
Lower Deficit
10.8
7.9
4.1
0.1
‐1.3
0.2
1.6
5.5
3.0
0.4
1.3 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 ...
74.0
67.7
59.6
52.7
46.5
39.9 40.0
46.1
42.4
39.2
36.0
35.0
33.0
31.0
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
75.0
20...
Net Public Sector Debt
Net PublicSectorDet‐to‐GDP (%)
61.5
18.0
15
20
25
30
35
40
45
50
55
60
65
2002 2003 2004 2005 2006 ...
Public Sector is now a Net External Creditor
88.4
‐31.3
‐40
‐30
‐20
‐10
0
10
20
30
40
50
60
70
80
90
2002
2003
2004
2005
2...
Government Interest Payments
85.7
16.7
15.2
14.8
3.4
3.0
0
20
40
60
80
100
2002
2003
2004
2005
2006
2007
2008
2009
2010
20...
Public Invesment Expenditures
PublicInvesmentExpenditures(BillionTL)
7.9 8.0
8.7
11.7
14.7
16.5
21.7
24.4
32.8
37.6
40.2
5...
38
Nov, 20122003
44%
47%
9%
Fixed Floating CPI Indexed
Lower Interest Rate Risk
Source: Treasury
52%
29%
20%
Fixed Floatin...
39
41.9
72.8
58.1
27.2
20
30
40
50
60
70
80
2002 2011
TL Stock Döviz StockFX Sock
Lower FX Risk
Central Government Debt St...
9.4
61.2
6
14
22
30
38
46
54
62
2002 2012 Nov
40
Lengthening Maturity of Domestic BorrowingMaturity of  Debt(Months)
Sourc...
Solid Banking Sector
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
20...
Capital Adequacy Ratio*
17.4
8
10
12
14
16
18
20 Belgium
Ireland
Turkey
Denmark
Germany
Bosniaand…
Sweden
Bulgaria
Austria...
Strong Households
43
Source: CBRT, ECB
(Household Liabilities, % of GDP, 2012 Q2)
65.7
19.9
0 20 40 60 80 100 120 140 160
...
Current Account Deficit
as a Structural Problem
44
(%)
10
12
14
16
18
20
22
24
26
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
45
Savings‐Investment Gap
Source: Mi...
‐5
0
5
10
15
20
25
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Public Savings/GDP Private Savings/GDP
(%)
46
So...
Foreign Dependence on Energy Imports
% 72 
Total Energy
% 92 
Oil
% 98 
Natural‐gas
47
Electricity Generation Installed Capacity
Kaynak: Ministry of Energy and Natural Resources
48
MW % of Total
Current Instal...
Source: TURKSTAT, Bloomberg
*2012 November 12 Month Rolling
Energy Import Bill
(Brent Type, Dollar/Barrel)
Energy Imports ...
Energy‐saving Potential
Industrial 
sector 
20%
Transportation 
sector
15%
Construction 
sector 
30%
There is a considerab...
New Steps towards better Energy Efficiency
Grants to enterprises that reduce energy intensity by 10%
Occupancy permits is ...
R&D and Innovation
52
Brand Turkey, moving up the Ladders
Source: Brand ‐ Finance
With a brand value of 
$373 bn, Turkey ranks 19th
globally
53
Boosting R&D Innovation 
Creating 
Brand Names
Moving up the Value Chain
54
Why is R&D so significant for us?
The share of high and medium‐high
technology sectors in production and in
export is low
...
•0.862011
•0.532002
Source: The Scientific and Technological Council of Turkey
R&D Spending
56
Industrial Design Applications
36,578 applications in 2011
Up by 80 % since 2002
Ranking 3rd in Europe
Source: TPI
57
Trademark Applications
• 117,723
2011
• 36,429
2002
Source: Turkish Patent Instıtute
58
Patent  Applications
Kaynak: TPE
59
1,874
10,241
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
2002 ...
Reform Agenda
60
Tax Reform
61
Our Tax Policy
Sustaining Fiscal 
Discipline
Increasing 
Employment & 
Investments
Reducing Regional 
Development Gaps
Enh...
Simplifying Tax System
Building a Simple and Effective Tax system
• Boosting competitiveness
• Widening tax base
• Increas...
Legislative Tax Reforms: Completed
Corporate 
Income Tax
Transfer 
Pricing
Commercial 
Code
64
Legislative Tax Reforms: Under Progress
Personal Income Tax Tax Procedure Law
65
Focusing on the tax‐payer & voluntary 
compliance
• Improving the technological infrastructure
• Risk‐based Assessments
• ...
Combatting Shadow Economy
67
Combatting Shadow Economy
A level 
playing 
field
Improved 
Business 
Environment
Healthy 
Economy
Sound Fiscal 
Performan...
Size of Shadow Economy (2012, % GDP)
32.3
29.6
29.5
29
28.6
27.2
26.5
26
25.8
25
24.3
22.8
21.6
19.4
19.2
19.2
17.1
16.4
1...
Turkey: 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
27
28
29
30
31
32
33
2003
2004...
Size of Pure Tax Evasion (% 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...
Privatizations
72
19 %
$8.2 bn $35.4 bn
81%
Source: PA
29 131 486 244 423 568 412 515 292 466
1,020
38
2,717
120 536 187
1,283
8,222 8,096
4...
AT THE APPROVAL STAGE DATE OF TENDER $ [Million]
DOĞUSAN  22.11.2012 5.2
SMALL HYDRO PP’s 27.11.2012 0.7
AKDENİZ ELECTRICI...
75
% of shares
belonging to 
Privatization 
Administration
Administration 
leads 
privatization of 
key enterprises 
in Tu...
PRIVATIZATION  IMPLEMENTATIONS AT TENDER STAGE
COMPANIES Bidding Deadline
İstanbul Anadolu Yakası Electricity DisCo 19.02....
Private and confidential 77
Upcoming Projects 
• Fenerbahçe – Kalamış Marina
• Mersin Taşucu Marina
• Salıpazarı Cruise Po...
Judicial Reform
78
New Iniatives
4th Judicial Reform Package
A New Constitution
A New Patent Law
79
Deepening Capital Markets
80
A New Capital Markets Law
81
New legal framework in line with the 
best global practices
•Increasing financial deepening &...
Restructuring of ISE
82
Regional Leadership
Raising Market Cap/GDP to 80%
1,000 new companies
Increasing Private Pensions
25% State Contribution
Penalty for Early Withdrawals
83
Extending Maturity Period of Savings
Maturity Withholding Tax Rate (TL, %)
0‐6 Months 15% 
6‐12 Months 12% 
1 year and ove...
Incentives for Global Fund Managers
A tax free environment for Global Funds
85
Making it easier to manage assets in Turkey
Incentives for Venture Capital
• 10% of VC Revenues
• 20% of VC Capital
Allowing contributions to Venture Capital to 
be d...
Incentives for Business Angels
87
75% income tax relief on
Angel Capital
100% tax relief for
R&D and Innovation
Income & W...
Sukuk
Global issuance:  $170 bn
Similar to euro bonds, international holders of Sukuk
will not be subject to withholding t...
Enhancing Investment Climate
89
New Investment Incentive Scheme
Objectives:
‐ Reduce regional development gaps
‐ Reduce current account deficit
‐ Promote ...
YENİ TEŞVİK SİSTEMİ
Regional
 Customs Duty 
Exemption
 VAT Exemption 
 Lower CIT rate
 Support for the 
employer’s sha...
Supporting Strategic Investments
Strategic Investments are supported regardless of location
Customs Duty Exemption
VAT Exc...
Transportation and Infrastructure
93
1,714 Km
Total of Motorways
4,387 Km
Total of State and 
Provincial Dual 
Carriageways 
Total: 6,101 Km
Dual Carriageway 
...
İSTANBUL
ESKİŞEHİR POLATLI
ANKARA
KONYA
SİVAS
212 km
533 km
405 km
YOZGAT
Yerköy
AFYON
İZMİR
MANİSA
624 km
BURSA
BİLECİK
1...
Our Railway Targets
By 2023
$45 billion ‐ investment
10 thousand km network of new
high‐speed rail
4 thousand km of new
co...
2003 2012 2011 2012
9,147,439
64,548,932
58.258.324
64,548,932
25,296,216
65,408,929
59.362.145
65,408,929
672,293
671,531...
AIRPORTS AVAILABLE FOR CIVIL AVIATION TRAFFIC IN TURKEY
2003
2012
Airports serving Scheduled 
Flight (49)
Airports under C...
Education
99
11.3
68.1
10
20
30
40
50
60
70
2002 2013
Source: Ministry of Finance
Resources Allocated to Education Billion TL
9.4
17
8
10
12
14
16
18
2002 2013
Source: Ministry of Finance
Share of Education Budget%
101
Gross Schooling Rates
Source: Ministry of Development of Republic of Turkey
11.2
96.5
80.8
35.8
46.4
108.4
92.6
81.6
10
30...
Improving Quality of Education
With Fatih Project, we are providing our children with
Broadband Internet Access
Smart Boar...
Labor Market
104
Low Employment Rate
Early retirement
Low rate of female labor 
force participation
Rigidities in labor force 
market 
105
Average Retirement Age
41.0
44.9
61.9
63.3
30
35
40
45
50
55
60
65
Women Men
Turkey OECD
Source: OECD
106
Labor Force Participation Rate, Female
30.7
17.4
26.8
31.8
37.7
72.6
10
20
30
40
50
60
70
80
Total Illeterate Less than hi...
Improving Girls’ Education
2002 2012
91 girls
per 100
boys
100.4 girls
per 100
boys
108
Average Weekly Hours Worked on the Main Job
(2011) 
Source: OECD
109
48,9
30
32
34
36
38
40
42
44
46
48
50
Turkey
Korea
Me...
Share of Part‐time Employment (%, 2011)
Source: OECD
110
11,7
0
5
10
15
20
25
30
35
40
Netharlands
Switzerland
Ireland
Aus...
National Employment Strategy
4 Main Objectives
Reducing labor market rigidities
Increasing employment of women, youth and ...
Long-Term Growth
112
Determinants of Long‐Term Growth
Quality of Institutions
Demographics
Productivity
113
Quality of Institutions
Combatting
corruption
Creating a level
playing field
Improving
international
competitiveness
114
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
I...
Corruption Perceptions Index (2012)
(54th among 176 countries)
Source: Transperancy Intenational
116
54
69
72
80
94 94
102...
Within the period of 2005-2012, Turkey has ranked higher than Russia,
Argentina and Greece.
(71st among 125 countries)
38
...
(43rd among 144 countries)
Source: World Economic Forum
Global Competitiveness Index (2012)
118
29
41
42 43
48
49
50
53
59...
(84th among 175 countries)
Source: World Bank
Ease of Doing Business (2006)
119
62
69 70
71
84
93
97
108
111
122
131
138
6...
(71st among 185 countries)
Source: World Bank
Ease of Doing Business (2012)
120
48
71 72
73
78
84
89
91
112
124
128
130 13...
EU Accession
121
Despite unfavorable politics of enlargement,
EU accession process is relevant
Despite the general percept...
Favorable Demographics
122
Source: Eurostat
Shareof15-24yearsoldinTotalPopn(%)
16.8
7
9
11
13
15
17
19
21
Andorra
Italy
Gr...
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
AnnualAveragePopulationGrowth
Rate(%,2001-11...
Have Investors noticed the
Transformation?
124
Int’l Companies Operating in Turkey
(1000s)
Source: Ministry of Economy
125
5.6
6.7
8.8
11.7
15.0
16.1
19.2
22.0
25.2
29.6...
Foreign Direct Investment Inflows
Source: CBRT
Billiondollar
14.8
121.1
0
20
40
60
80
100
120
140
1980‐2002 2003‐2012 Nove...
REER Appreciation
Source: CBRT
(2003=100)
127
55
65
75
85
95
105
115
125
135
1989-1
7
1990-1
7
1991-1
7
1992-1
7
1993-1
7
...
THANK YOU!
Questions?
128
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Road show sunumu v7 2013.01.22

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Road show sunumu v7 2013.01.22

  1. 1. BAML  Turkey Investment Conference January 2013 Mehmet Şimşek Minister of Finance
  2. 2. Outlook for Turkish Economy 2
  3. 3. Strong Post‐Crisis Recovery, but Growth has Moderated Source: TURKSTAT Real GDP  (s.a, 2007Q4=100) 3 96.1 100.0 88.1 114.2 80 85 90 95 100 105 110 115 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
  4. 4. Soft Landing  Growing  Economy Narrowing  Current Account Deficit Declining  Inflation Lower  Unemployment Falling  Public Debt 4
  5. 5. Rebalancing is largely doneContribution to Growth, ppt Source: TURKSTAT 5 17.6 14.2 7.9 1.9 ‐1.3 ‐2.9 ‐1.8 ‐5.6 ‐5.1 0.5 3.2 4.7 5.9 3.4 12.1 1.6 ‐6 ‐2 2 6 10 14 18 Ç1‐11 Ç2‐11 Ç3‐11 Ç4‐11 Ç1‐12 Ç2‐12 Ç3‐12 Domestic Demand Net Export Growth Q1‐11 Q2‐11 Q3‐11 Q4‐11 Q1‐12 Q2‐12 Q3‐12
  6. 6. Unemployment Rate (%) Source: TURKSTAT 9.3 9.1 7 8 9 10 11 12 13 14 15 16 17 2008‐1 2009‐1 2010‐1 2011‐1 2012‐1 Seasonally Adjusted Headline Lowest level  since 2005 6
  7. 7. Inflation Rate (y/y, %) Source: TURKSTAT 6.2 4 8 12 16 20 24 28 32 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 Lowest rate for the past 44 years 7
  8. 8. Current Account Balance (12 MonthRolling, USD bn) ‐52 8 ‐34.9 ‐80 ‐70 ‐60 ‐50 ‐40 ‐30 ‐20 ‐10 0 10 20 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 Non‐energy Overall Excl FDI,  Net E&O 8 Source: Central Bank of Turkey
  9. 9. Gold Effect? Source: Central Bank of Turkey (12 MonthRolling, USD bn) ‐110 ‐100 ‐90 ‐80 ‐70 ‐60 ‐50 ‐40 ‐30 ‐20 ‐10 0 10 20 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 Energy Balance Gold Balance The Balance of Services, Revenue and Transfers The Trade Balance excluding Energy and Gold Current Account Balance 9 Net Gold Exports  (12‐month Rolling) 2011 Nov. 2012 Billion $ ‐4.8 5.5 Percent of GDP ‐0.6% 0.7%
  10. 10. Financing of the Current Account Deficit Source: Central Bank of Turkey (12 MonthRolling, USD bn) ‐10 0 10 20 30 40 50 60 70 80 90 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 3 5 7 9 11 2012‐1 3 5 7 9 11 FDI Inflows and Long‐Term Portfolio and Short‐Term Current Account Deficit 10
  11. 11. Rising Reserves(CBRT Total Reserves, USD bn) 55 60 65 70 75 80 85 90 95 100 105 110 115 120 125 1/4/2007 4/4/2007 7/4/2007 10/4/2007 1/4/2008 4/4/2008 7/4/2008 10/4/2008 1/4/2009 4/4/2009 7/4/2009 10/4/2009 1/4/2010 4/4/2010 7/4/2010 10/4/2010 1/4/2011 4/4/2011 7/4/2011 10/4/2011 1/4/2012 4/4/2012 7/4/2012 10/4/2012 1/4/2013 122.1 11 Source: Central Bank of Turkey
  12. 12. Real Effective Exchange RateCPI ‐Developing Countries ‐Based REER  (2003=100) 85 90 95 100 105 110 115 120 125 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 12 Source: Central Bank of Turkey
  13. 13. Europe %56.6 Other %43.4 Exports 2002 Fallout from the EU Crisis Europe %38,8 Other %62,2 Exports Jan‐Nov 2012 13 Source: TURKSTAT
  14. 14. MENA Region—A Savior Share of MENA in total exports(%) 12.1 31.8 5 10 15 20 25 30 35 2002 2012 Jan‐Nov 14 Source: TURKSTAT
  15. 15. Export to MENA and EU‐27 (2007=100, 3‐Month Moving Average) Source: TURKSTAT 60 120 180 240 300 360 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 3 5 7 9 11 2012-1 3 5 7 9 11 EU‐27 MENA 15
  16. 16. 8 32 0 5 10 15 20 25 30 35 2000 2011 Export Diversification ‐ I Number of Products over $1 billion 16 Source: TURKSTAT
  17. 17. 5 30 0 5 10 15 20 25 30 35 2000 2011 Number of Export Markets over $1 billion Export Diversification ‐II 17 Source: TURKSTAT
  18. 18. Share of Largest Five in Total Exports (%) Top Export Markets (%, USD bn) 2002 2011 Germany $5,9 Germany $14,0 USA $3,4 USA $8,3 United Kingdom $3,0 United Kingdom $8,2 Italy $2,4 Italy $7,9 France $2,1 France $6,8 Largest Five 46,5% Largest Five 33,4% Source: TURKSTAT
  19. 19. Overstating Current Account Deficit Reference Price Practice by the Customs Difficulties in estimating tourism revenues 19
  20. 20. Stronger Growth in 2013 20
  21. 21. Outlook for 2013  Faster Growth Slight Increase in  C/A Deficit Declining  Inflation Lower  Unemployment Falling  Public Debt 21
  22. 22. PMI & Manufacturing Index Source:CBT, HSBC 90 95 100 105 110 115 120 125 130 135 30 35 40 45 50 55 60 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 PMI (Left) Manufacturing Index (s.a.) (Right) 22
  23. 23. Consumer & Real Sector Confidence Index Source: CBT, TURKSTAT 65 70 75 80 85 90 95 100 50 60 70 80 90 100 110 120 130 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 3 5 7 9 11 2012‐1 3 5 7 9 11 Real Sector Confidence Index (Left) Consumer Confidence Index (Right) 23
  24. 24. Looser Monetary Policy( %) Source: CBRT 24 5.00 9.00 5.75 4 5 6 7 8 9 10 11 12 13 14 October 11 October 11 December 11 December 11 January 12 February 12 March 12 April 12 May 12 Jun 12 July 12 August 12 September 12 October 12 November 12 CBRT Funding Rate O/N Borrowing O/N Lending Policy Rate
  25. 25. Falling Lending Rates( %) 25 8 10 12 14 16 18 20 22 24 26 1/4/2008 3/4/2008 5/4/2008 7/4/2008 9/4/2008 11/4/2008 1/4/2009 3/4/2009 5/4/2009 7/4/2009 9/4/2009 11/4/2009 1/4/2010 3/4/2010 5/4/2010 7/4/2010 9/4/2010 11/4/2010 1/4/2011 3/4/2011 5/4/2011 7/4/2011 9/4/2011 11/4/2011 1/4/2012 3/4/2012 5/4/2012 7/4/2012 9/4/2012 11/4/2012 Personal Vehicle Housing Commercial Source: CBRT
  26. 26. Credit Growth 26 * Credit Growth is adjusted for exchange rate movements Source: CBRT 13 week moving avg., y‐on‐y % 19 0 5 10 15 20 25 30 35 40 45 2011‐Jan. Feb. Mar. Mar Apr. May. Jun. July. Aug. Sep. Oct. Nov. Dec. 2012‐Jan. Feb. Mar. Mar Apr. May. Jun. July. Aug. Sep. Oct. Nov. Dec. 2013‐Jan.
  27. 27. Employment is Supportive of Growth Source:TURKSTAT 20 21 22 23 24 25 2008‐1 2009‐1 2010‐1 2011‐1 2012‐1 27 Employment  since end‐2007  (MnPeople, s.a.)
  28. 28. Strong Job Creation 28 3.9 ‐5.0 ‐4.0 ‐3.0 ‐2.0 ‐1.0 0.0 1.0 2.0 3.0 4.0 5.0 Ireland Spain Greece Iceland Denmark Estonia Portugal Japan Slovenia Italy United States Finland France United Kingdom Slovak Republic Czech Republic Netherlands New Zealand Austria Canada Germany Korea Belgium Norway Switzerland Sweden Australia Israel Singapore Turkey AnnualAverageEmploymentGrowth (%, 2007‐11) Source: WEO, TURKSTAT
  29. 29. 80 100 120 140 160 180 200 220 2008‐1 2009‐1 2010‐1 2011‐1 2012‐1 USA EU‐27 Turkey Unemployment at Decade LowUnemployment Rate, s.a. (December 2007=100) Source: Eurostat, TURKSTAT
  30. 30. Other Factors 30 Urban Renewal   Sale of 2B Land Removal of  Reciprocity Investment  Grade Rating
  31. 31. Sound Fiscal Position 31
  32. 32. Lower Deficit 10.8 7.9 4.1 0.1 ‐1.3 0.2 1.6 5.5 3.0 0.4 1.3 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) 32 Achieved Maastricht Criteria except 2009 Source: Ministry of Finance Budget Deficit‐to‐GDP, %
  33. 33. 74.0 67.7 59.6 52.7 46.5 39.9 40.0 46.1 42.4 39.2 36.0 35.0 33.0 31.0 30.0 35.0 40.0 45.0 50.0 55.0 60.0 65.0 70.0 75.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Medium‐Term Program  (2013‐15) 33 Lower Debt Debt‐to‐GDP, % Satisfying Maastricht Criteria since 2004 Maastricht Criteria:  60% Source: Treasury
  34. 34. Net Public Sector Debt Net PublicSectorDet‐to‐GDP (%) 61.5 18.0 15 20 25 30 35 40 45 50 55 60 65 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q3 34 Source: Treasury
  35. 35. Public Sector is now a Net External Creditor 88.4 ‐31.3 ‐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 Q3 Public Net External Debt  (BillionTL) 35 Source: Treasury
  36. 36. Government Interest Payments 85.7 16.7 15.2 14.8 3.4 3.0 0 20 40 60 80 100 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Interest Payments/Tax Revenues (%) Interes Payments/GDP (%) Medium‐Term Program  (2013‐15) 36 Source: Ministry of Finance
  37. 37. Public Invesment Expenditures PublicInvesmentExpenditures(BillionTL) 7.9 8.0 8.7 11.7 14.7 16.5 21.7 24.4 32.8 37.6 40.2 5 10 15 20 25 30 35 40 45 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 37 Source: Ministry of Finance
  38. 38. 38 Nov, 20122003 44% 47% 9% Fixed Floating CPI Indexed Lower Interest Rate Risk Source: Treasury 52% 29% 20% Fixed Floating CPI Indexed
  39. 39. 39 41.9 72.8 58.1 27.2 20 30 40 50 60 70 80 2002 2011 TL Stock Döviz StockFX Sock Lower FX Risk Central Government Debt Stock (%) Source: Treasury
  40. 40. 9.4 61.2 6 14 22 30 38 46 54 62 2002 2012 Nov 40 Lengthening Maturity of Domestic BorrowingMaturity of  Debt(Months) Source: Treasury
  41. 41. Solid Banking Sector 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  Capital adequacy ratio is almost twice the minimum legal limit  of 8 %. 41 Capital Adequacy Ratio, % Target Rate 12%  Legal Rate 8%  Source: BRSA
  42. 42. Capital Adequacy Ratio* 17.4 8 10 12 14 16 18 20 Belgium Ireland Turkey Denmark Germany Bosniaand… Sweden Bulgaria Austria England Hungary Finland Romania Holland Poland Italy Spain France Portugal Slovenia Sweden Greece 42 ( %) * Latest available ratios Source: Banking Regulation and Supervision Agency , IMF
  43. 43. Strong Households 43 Source: CBRT, ECB (Household Liabilities, % of GDP, 2012 Q2) 65.7 19.9 0 20 40 60 80 100 120 140 160 Denmark Netherlands Ireland United Kingdom Portugal Sweden Spain Euro area Finland Malta Greece Germany France Belgium Austria Luxembourg Estonia Italy Latvia Poland Hungary Czech Republic Slovenia Slovakia Lithuania Turkey
  44. 44. Current Account Deficit as a Structural Problem 44
  45. 45. (%) 10 12 14 16 18 20 22 24 26 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 45 Savings‐Investment Gap Source: Ministry of Development
  46. 46. ‐5 0 5 10 15 20 25 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Public Savings/GDP Private Savings/GDP (%) 46 Source: Ministry of Development Falling Private Savings
  47. 47. Foreign Dependence on Energy Imports % 72  Total Energy % 92  Oil % 98  Natural‐gas 47
  48. 48. Electricity Generation Installed Capacity Kaynak: Ministry of Energy and Natural Resources 48 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
  49. 49. Source: TURKSTAT, Bloomberg *2012 November 12 Month Rolling Energy Import Bill (Brent Type, Dollar/Barrel) Energy Imports (Billion Dollars) 9 48 54 60 23 97 111 114 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 Nov Energy Import Oil Prices 49
  50. 50. Energy‐saving Potential Industrial  sector  20% Transportation  sector 15% Construction  sector  30% There is a considerable potential to save  energy. 50
  51. 51. New Steps towards better Energy Efficiency Grants to enterprises that reduce energy intensity by 10% Occupancy permits is not provided for buildings that are noncomplying with the minimum energy efficiency criteria. Obsolete vehicles used by public institutions will gradually be taken off the traffic.  Tax relief to remove cars older than 22 years to salvage 51
  52. 52. R&D and Innovation 52
  53. 53. Brand Turkey, moving up the Ladders Source: Brand ‐ Finance With a brand value of  $373 bn, Turkey ranks 19th globally 53
  54. 54. Boosting R&D Innovation  Creating  Brand Names Moving up the Value Chain 54
  55. 55. 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 55
  56. 56. •0.862011 •0.532002 Source: The Scientific and Technological Council of Turkey R&D Spending 56
  57. 57. Industrial Design Applications 36,578 applications in 2011 Up by 80 % since 2002 Ranking 3rd in Europe Source: TPI 57
  58. 58. Trademark Applications • 117,723 2011 • 36,429 2002 Source: Turkish Patent Instıtute 58
  59. 59. Patent  Applications Kaynak: TPE 59 1,874 10,241 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 2002 2011
  60. 60. Reform Agenda 60
  61. 61. Tax Reform 61
  62. 62. Our Tax Policy Sustaining Fiscal  Discipline Increasing  Employment &  Investments Reducing Regional  Development Gaps Enhancing  Competitiveness 62
  63. 63. Simplifying Tax System Building a Simple and Effective Tax system • Boosting competitiveness • Widening tax base • Increasing tax predictability • Supporting Investments & Employment
  64. 64. Legislative Tax Reforms: Completed Corporate  Income Tax Transfer  Pricing Commercial  Code 64
  65. 65. Legislative Tax Reforms: Under Progress Personal Income Tax Tax Procedure Law 65
  66. 66. Focusing on the tax‐payer & voluntary  compliance • Improving the technological infrastructure • Risk‐based Assessments • E‐archive implementation • E‐invoicing, e‐book‐keeping • Declaration of Tax Payers’ Rights Micro‐Level Tax Reforms
  67. 67. Combatting Shadow Economy 67
  68. 68. Combatting Shadow Economy A level  playing  field Improved  Business  Environment Healthy  Economy Sound Fiscal  Performance Better  Social  Safety Net 68
  69. 69. Size of Shadow Economy (2012, % GDP) 32.3 29.6 29.5 29 28.6 27.2 26.5 26 25.8 25 24.3 22.8 21.6 19.4 19.2 19.2 17.1 16.4 16 16 14.8 14.7 13.8 13.7 13.5 12.8 11 10.5 9 8.2 7.9 7.8 5 10 15 20 25 30 35 Bulgaria Romania Croatia Lithuania Estonia Turkey latvia Cyprus Malta Poland Greece Hungary Italy Portugal Average Spain Belgium Czech Rep Slovenia Slovakia Norway Sweeden Denmark Finland Germany ireland France UK Netherlands Luxembourg Austria Switzerland 69
  70. 70. Turkey: 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 27 28 29 30 31 32 33 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 70
  71. 71. Size of Pure Tax Evasion (% 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 Average of 38 Countries Tax evasion is on average 3 ppt higher in Turkey 71
  72. 72. Privatizations 72
  73. 73. 19 % $8.2 bn $35.4 bn 81% Source: PA 29 131 486 244 423 568 412 515 292 466 1,020 38 2,717 120 536 187 1,283 8,222 8,096 4,259 6,296 2,274 3,085 1,358 3.018 0 1.000 2.000 3.000 4.000 5.000 6.000 7.000 8.000 9.000 1985–1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (US$m) PRIVATIZATION  REVENUES Total privatization revenue  $43.6 bn Amount of due recievables : $12 bn
  74. 74. AT THE APPROVAL STAGE DATE OF TENDER $ [Million] DOĞUSAN  22.11.2012 5.2 SMALL HYDRO PP’s 27.11.2012 0.7 AKDENİZ ELECTRICITY DISTRUBITION COMPANY 12.11.2012 546.0 PORT AREA OF KEMERKÖY / MUĞLA 13.12.2012 31.1 BOĞAZİÇİ ELECTRICITY DISTRUBITION COMPANY 14.12.2012 1,960.0 MOTORWAYS & BOPHORUS BRIDGES 17.12.2012 5,720.0 GEDİZ ELECTRICITY DISTRUBITION COMPANY 19.12.2012 1,231.0 SEYİTÖMER THERMAL POWER PLANT 28.12.2012 2,248.0 VARIOUS IMMOVABLES _ 44.3 TOTAL VALUE OF THE TENDERS AT THE APPROVAL STAGE 11,786.3 AT THE CLOSING STAGE VARIOUS IMMOVABLES _ 207.0 SMALL HYDRO PP’s in 13 GROUPS _ 231.7 TOTAL VALUE OF THE TENDERS AT THE CONTRACTING  STAGE 439.0 TOTAL VALUE OF TENDERS TO BE CONTRACTED 12,225.3 FINALIZED PRIVATIZATION TENDERS AT THE APPROVAL & CLOSING STAGE PRIVATIZATION  IMPLEMENTATIONS AT APPROVAL and CLOSING STAGE REAL ESTATE REAL ESTATE
  75. 75. 75 % of shares belonging to  Privatization  Administration Administration  leads  privatization of  key enterprises  in Turkey Major Companies in the  Privatization Portfolio Banking  Sugar industries  Electricity  distribution  Natural gas  distribution  Turkish Airlines  Maritime  transportation  Immovables Retail Floor tiles & cement  pipes  50 100 100 100 49 100 100 100 56 Companies to be  privatized under  special legislation National lottery  games Toll motorways Telecom Electricity  generation TCDD Ports 31,68 % MAJOR COMPANIES AND ENTITIES IN THE PRIVATIZATION PORTFOLIO
  76. 76. PRIVATIZATION  IMPLEMENTATIONS AT TENDER STAGE COMPANIES Bidding Deadline İstanbul Anadolu Yakası Electricity DisCo 19.02.2013 Toroslar Electricity DisCo 19.02.2013 Dicle Electricity DisCo 19.02.2013 Vangölü Electricity DisCo 19.02.2013 Hamitabat Electricity Generation And Trade Inc. Co 28.02.2013 Yeditepe Beynelminel Otelcilik Turizm ve Ticaret A.Ş. 03.04.2013 Taksim Otelcilik A.Ş. 03.04.2013 Kangal Electricity Generation Plant 7 bids recieved 17.01.2013 Başkent Natural Gas Distribution 6 bids recieved 18.01.2013
  77. 77. Private and confidential 77 Upcoming Projects  • Fenerbahçe – Kalamış Marina • Mersin Taşucu Marina • Salıpazarı Cruise Port‐Galataport • Derince Container Port • İzmir Container Port • İzmir Cruise Port • Haydarpaşa Port &Train Station Transformation Project • Türk Telekom • Sugar Factories • National Lottery Games
  78. 78. Judicial Reform 78
  79. 79. New Iniatives 4th Judicial Reform Package A New Constitution A New Patent Law 79
  80. 80. Deepening Capital Markets 80
  81. 81. A New Capital Markets Law 81 New legal framework in line with the  best global practices •Increasing financial deepening & innovation •Strengthening investor rights •Improving corporate governance
  82. 82. Restructuring of ISE 82 Regional Leadership Raising Market Cap/GDP to 80% 1,000 new companies
  83. 83. Increasing Private Pensions 25% State Contribution Penalty for Early Withdrawals 83
  84. 84. Extending Maturity Period of Savings Maturity Withholding Tax Rate (TL, %) 0‐6 Months 15%  6‐12 Months 12%  1 year and over 10%  Maturity Withholding Tax Rate (FX, %) 0‐6 Months 18% 6‐12 Months 15%  1 year and over 13%  84
  85. 85. Incentives for Global Fund Managers A tax free environment for Global Funds 85 Making it easier to manage assets in Turkey
  86. 86. Incentives for Venture Capital • 10% of VC Revenues • 20% of VC Capital Allowing contributions to Venture Capital to  be deducted from Corporate & Personal  Income Tax Base, up to 86 Tax Relief on Dividends
  87. 87. Incentives for Business Angels 87 75% income tax relief on Angel Capital 100% tax relief for R&D and Innovation Income & Withholding Tax  Relief on divestment of stocks
  88. 88. Sukuk Global issuance:  $170 bn Similar to euro bonds, international holders of Sukuk will not be subject to withholding tax Sep‐12: Sukuk issued for $1.5bn Oct‐12: Sukuk denominated in TL issued for TL1.6bn 88
  89. 89. Enhancing Investment Climate 89
  90. 90. 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 90
  91. 91. 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 91
  92. 92. Supporting Strategic Investments Strategic Investments are supported regardless of location Customs Duty Exemption VAT Exception Support for the employer’s share of insurance premium for 7 years (10  years in the 6th region) 90% tax reduction, of which contribution rate to investment is 50% Interest Support (Minimum 50 million TL, on condition that it does not  exceed 5% of the fixed investment)  Allocation of Investment Location VAT Retubate for the building construction costs (For the investments  amounting to 500 Million TL and above) Income Tax Stoppage Support (Only for the investments in the 6th region  for 10 years) 92
  93. 93. Transportation and Infrastructure 93
  94. 94. 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) 2,236 Km Total of Motorways 19,968 Km Total of State and  Provincial Dual  Carriageways Total: 22,204 Km Dual Carriageway  Network (December 1, 2012) 94
  95. 95. İSTANBUL ESKİŞEHİR POLATLI ANKARA KONYA SİVAS 212 km 533 km 405 km YOZGAT Yerköy AFYON İZMİR MANİSA 624 km BURSA BİLECİK 110 km Under construction Completed At tender phase 95 High Speed Railway Projects Source: Ministry of Transport   95
  96. 96. Our Railway Targets By 2023 $45 billion ‐ investment 10 thousand km network of new high‐speed rail 4 thousand km of new conventional railways Between 2023 and 2035 1.480 km of high‐speed train lines 956 km of conventional lines 96
  97. 97. 2003 2012 2011 2012 9,147,439 64,548,932 58.258.324 64,548,932 25,296,216 65,408,929 59.362.145 65,408,929 672,293 671,531 672,293 34,443,655 130,630,154 118,292,000 130,630,154 DOMESTIC INTERNATIONAL OVERFLIGHT TOTAL 2003 2012 2011 2012 156,582 599,670 579,488 599,670 218,405 490,962 462,881 490,962 154,218 283,008 292,816 283,008 529,205 1,373,640 1,335,185 1,373,640 DOMESTIC INTERNATIONAL OVERFLIGHT TOTAL HAVALİMANLARI UÇAK – YOLCU TRAFİKLERİ 97 Plane Traffic at the Airports Passenger Traffic at the Airports
  98. 98. AIRPORTS AVAILABLE FOR CIVIL AVIATION TRAFFIC IN TURKEY 2003 2012 Airports serving Scheduled  Flight (49) Airports under Construction (5) Airports being Planned(2) The number of  airports serving scheduled  flights=49 The number of  airports serving scheduled  flights=26 Airports serving Scheduled  Flight (26) 98
  99. 99. Education 99
  100. 100. 11.3 68.1 10 20 30 40 50 60 70 2002 2013 Source: Ministry of Finance Resources Allocated to Education Billion TL
  101. 101. 9.4 17 8 10 12 14 16 18 2002 2013 Source: Ministry of Finance Share of Education Budget% 101
  102. 102. Gross Schooling Rates Source: Ministry of Development of Republic of Turkey 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 102
  103. 103. Improving Quality of Education With Fatih Project, we are providing our children with Broadband Internet Access Smart Boards Tablet PCs Other Information Technology Tools 103
  104. 104. Labor Market 104
  105. 105. Low Employment Rate Early retirement Low rate of female labor  force participation Rigidities in labor force  market  105
  106. 106. Average Retirement Age 41.0 44.9 61.9 63.3 30 35 40 45 50 55 60 65 Women Men Turkey OECD Source: OECD 106
  107. 107. Labor Force Participation Rate, Female 30.7 17.4 26.8 31.8 37.7 72.6 10 20 30 40 50 60 70 80 Total Illeterate Less than high school High school Vocational high school Higher school LaborForce PaticipationRate byEducation (%, October2012) OECD Average: 62.3 Source: TURKSTAT, OECD 107
  108. 108. Improving Girls’ Education 2002 2012 91 girls per 100 boys 100.4 girls per 100 boys 108
  109. 109. Average Weekly Hours Worked on the Main Job (2011)  Source: OECD 109 48,9 30 32 34 36 38 40 42 44 46 48 50 Turkey Korea Mexico Greece CzechRepublic SlovakRepublic Poland Iceland Hungary Slovenia Portugal Chile Estonia Spain France Austria Italy NewZealand Finland Luxembourg Belgium Sweden UnitedKingdom Australia Germany Switzerland Ireland Norway Denmark Netherlands Highest among the OECD countries!
  110. 110. Share of Part‐time Employment (%, 2011) Source: OECD 110 11,7 0 5 10 15 20 25 30 35 40 Netharlands Switzerland Ireland Australia UnitedKingdom Germany NewZeland Japan Norway Canada Denmark Austria Belgium Mexico Chile Iceland Italy Luxembourg Sweeden Israel France Korea Spain Finland UnitedStates Turkey Portugal Greece Estonia Slovenia Poland Hungary SlovakRepublic CzechRepublıc 9th lowest among the OECD countries
  111. 111. National Employment Strategy 4 Main Objectives Reducing labor market rigidities Increasing employment of women, youth and the disadvantageous Strengthening the link between education and employment Strengthening the link between employment and social protection 111
  112. 112. Long-Term Growth 112
  113. 113. Determinants of Long‐Term Growth Quality of Institutions Demographics Productivity 113
  114. 114. Quality of Institutions Combatting corruption Creating a level playing field Improving international competitiveness 114
  115. 115. 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: Transperancy Intenational 115
  116. 116. Corruption Perceptions Index (2012) (54th among 176 countries) Source: Transperancy Intenational 116 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
  117. 117. Within the period of 2005-2012, Turkey has ranked higher than Russia, Argentina and Greece. (71st among 125 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) 117
  118. 118. (43rd among 144 countries) Source: World Economic Forum Global Competitiveness Index (2012) 118 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
  119. 119. (84th among 175 countries) Source: World Bank Ease of Doing Business (2006) 119 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
  120. 120. (71st among 185 countries) Source: World Bank Ease of Doing Business (2012) 120 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
  121. 121. EU Accession 121 Despite unfavorable politics of enlargement, EU accession process is relevant Despite the general perception of no progress, the underlying trend is positive
  122. 122. Favorable Demographics 122 Source: Eurostat Shareof15-24yearsoldinTotalPopn(%) 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 Former Yugoslav… Georgia Turkey Moldova Azerbaijan
  123. 123. 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 AnnualAveragePopulationGrowth Rate(%,2001-11)Growth Rate of Working‐Age Population Source: OECD, Eurostat, TURKSTAT 123
  124. 124. Have Investors noticed the Transformation? 124
  125. 125. Int’l Companies Operating in Turkey (1000s) Source: Ministry of Economy 125 5.6 6.7 8.8 11.7 15.0 16.1 19.2 22.0 25.2 29.6 31.9 0 5 10 15 20 25 30 35 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 November
  126. 126. Foreign Direct Investment Inflows Source: CBRT Billiondollar 14.8 121.1 0 20 40 60 80 100 120 140 1980‐2002 2003‐2012 November 126
  127. 127. REER Appreciation Source: CBRT (2003=100) 127 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 Linear Trend
  128. 128. THANK YOU! Questions? 128

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