Turkish Arab Capital Markets Forum, 20.09.2013

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Turkish Arab Capital Markets Forum, 20.09.2013

  1. 1. Turkish-Arab Capital Markets Forum September 20, 2013 Mehmet Şimşek Minister of Finance
  2. 2. Main Messages Turkey • A decade of transformation • Strong medium and long-term outlook Region • Offering vast opportunities • Growing links with Turkey 2
  3. 3. Turkey: A Decade of Transformation 3
  4. 4. Political Stability 4 15 Months 131 Months 0 20 40 60 80 100 120 140 Average Lifetime of Governements during 1950-2002 AK Party Governments Since 2002 1923-2002 Average Lifetime of Governments: 17 months 2002-12 Political Stability 2023 Targets
  5. 5. Rapidly Growing Economy 3.1 5.1 2.5 3 3.5 4 4.5 5 5.5 1993-2002 2003-12 Growth Source: TURKSTAT 5 (%)
  6. 6. Real Convergence with Advanced EconomiesIncomePerCapita(PPP,%) Source: IMF, OECD, TURKSTAT 6 23.4 36.436.9 56.8 20 25 30 35 40 45 50 55 60 2002 2012 Turkey / USA Turkey /European Union
  7. 7. 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,% 7
  8. 8. 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 8
  9. 9. 107,2 125,5 99,1 6,2 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 Declining Inflation Rate (y/y, %) Source: TURKSTAT Lowest rate for the past 44 years 2023 target low single-digits 9
  10. 10. Well-Capitalized Banking SectorCapitalAdequacyRatio,% Target Rate 12% Legal Rate 8% Source: BRSA Capital adequacy ratio twice the minimum legal limit of 8%. 15.9 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 5 10
  11. 11. Low Household Leverage Source: CBRT, ECB (HouseholdLiabilities,%ofGDP,2012) 11 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
  12. 12. Moderate Corporate Leverage 12 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
  13. 13. Turkey: Strong Medium and Long-Term Outlook 13
  14. 14. GDP Source: TURKSTAT, Medium-Term Program,PwC 2002 2050 2002 $ 230 billion 2050 $ 5 trillion 2012 $ 786 billion 2023 $ 2 trillion 14
  15. 15. GDP per Capita Source: TURKSTAT, Medium-Term Program,PwC 2002 2050 2002 $ 3,492 2012 $10,497 2023 $ 25,000 2050 $ 50,000 15
  16. 16. 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 16
  17. 17. Determinants of Long-Term Growth Quality of Institutions Demographics Productivity 17
  18. 18. 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 18
  19. 19. Priorities & A Strong Reform Agenda Enhancing Competition Deepening Capital Markets Education Improving Labor Market Flexibility Local & Renewable Energy Infrastructure Combatting Shadow Economy Moving up the Value-Chain Narrowing Regional Development Gaps 19
  20. 20. 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 20
  21. 21. Region 21
  22. 22. Region: Offering Vast Opportunities Offers vast opportunities Geography Demographics Growth Opportunities
  23. 23. Blessed Geography • Many nations are blessed with significant natural resources • Majority of the land is arid/ semi-arid 23
  24. 24. MENA: Demographics 24 Source: IMF, 2012 MENA: 389.3 million people MENA + Turkey: 464.9 million people
  25. 25. Extremely favorable demographics Turkey: 50% Young population is under a fifth of the EU population* * Source: Eurostat, 2007 census
  26. 26. MENA: A Sizeable Market Yemen $58 26 Source: IMF, 2012 MENA: $2,954 bn MENA + Turkey: $3,740 bn
  27. 27. With Strong Growth Prospects 27 MENAGDP(CurrentPrices,$Tn) 0.8 3.0 3.1 3.2 3.4 3.6 3.8 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2002 2012 2013 2014 2015 2016 2017 Projections Source: IMF, 2012
  28. 28. Supported by Huge Investment Projects $4.3 trillion construction projects by 2020. $250bn power sector in the next 5 28 Source: 11th Power-Gen Middle East Conference, Mena Economic Forum Feb 2013
  29. 29. But Regional Integration is Limited… Regional Integration should Grow and the Region Should Prosper
  30. 30. MENA Trade: Exports are Sizeable, but… Total Exports of MENA: $1,491 bn Total Imports of MENA: $877 bn 30 Source: WTO, 2012
  31. 31. Openness Total Trade Excluding Oil Excluding Natural Resources MENA (%, GDP) 47% 12% 8% WORLD (%, GDP) 22% 19% 18% 31 Source: Behar, A. and C. Freund, 2011, The Trade Performance of the Middle East and North Africa
  32. 32. Growing Links with Turkey 32
  33. 33. Source: TURKSTAT Trade Links are growing b/w Turkey & MENA 33 12.1 29.5 8 13 18 23 28 2002 July 2013 ShareofMENAinTurkishExports(%) Turkey’s Total Exports to MENA: $45.4 bn Turkey’s Total Imports from MENA: $24.9 bn
  34. 34. But Investments are still limited Investments: Growing, but could be much larger Turkey 34 Source: CBRT 2002-12 Turkey FDI Flows: Inflows: $8.3bn 3.2% of MENA Outflows Outflows: $1.1 bn 0.2% of MENA Inflows
  35. 35. Turkey & MENA: Complementary Regions Turkey: Water rich Turkey: Hydrocarbon poor 35 MENA: Hydrocarbon rich MENA: Scarcity of water MENA: Large Surpluses Turkey: A Large External Deficit
  36. 36. Growth Opportunities 36 Tourism Construction Agriculture Transportation Energy
  37. 37. (Millionpeople) 37 13.2 31.8 5 10 15 20 25 30 35 2002 2012 Tourism
  38. 38. Agriculture Sector in Turkey Source: World Bank, Ministry of Agriculture In 2002 $24 billion 11th in the world In 2011 $62 billion 6th in the world In 2023 $150 billion Turkey will be in the first five countries
  39. 39. Construction Source: Global Construction 2020 Urban Renovation Number of Residences: $ 6.5 mn Total Cost: $235.8 bn
  40. 40. Investment in Transportation Over the past 10 years, $75 billion invested in transportation $350 billion investment required for planned projects by 2023 40
  41. 41. Projects of the Century -I Marmaray Channel Istanbul Tube Tunnel 3rd Bridge 41
  42. 42. Projects of the Century - II Izmit Gulf Transit Istanbul-İzmir Highway High-Speed Train through Ankara-Bursa-Istanbul 42
  43. 43. Huge Investment Needs in Energy World energy demand is projected to grow by 40 % until 2030. Turkey’s energy demand is projected to grow by 146 % until 2030. Source: Ministry of Energy and Natural Resources Turkey ranks 2nd to China in energy demand growth 43
  44. 44. Thank You! 44

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