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Turkish Economy: The Road Ahead
 

Turkish Economy: The Road Ahead

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Turkish Economy: The Road Ahead

Turkish Economy: The Road Ahead

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    Turkish Economy: The Road Ahead Turkish Economy: The Road Ahead Presentation Transcript

    • Turkish Economy: The Road Ahead European Policy Centre 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 Real GDP  (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 % of GDP per Capita(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 Employmentsince 2005  (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 (Months) Political Stability 17 128 0 20 40 60 80 100 120 140 1923‐2002 AK Party
    • 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
    • Coup D’état and State of Emergency  Practices have come to an End 11 On the 12th day of the AK Party governments, “State of Emergency”  was brought to an end State Security Courts were first demilitarized and then abolished  completely Prime Ministry Follow‐Up Council, a follow‐up of the West Working  Group, were terminated Coup d’état periods have been taken under inspection by the Turkish  Grand National Assembly Proceedings for coup d’état processes have been initiated The National Security Council has been demilitarized
    • Motion of a Democratic and Transparent State 12 Constitutional amendment, allowing the election of  the President by the public A legitimate public access to information about  individuals and state, with the Law on Right to  Information  Offences such as bribery, extortion, misconduct listed  in the Turkish Criminal Code have been re‐regulated
    • Improving Standards of Human Rights 13 Institutional developments •Department of Human Rights •Turkish National Human Rights Institution •Ombudsman Institution Legislative amendments  •3rd & 4th Judicial Reform Package •Draft Law on Anti‐Discrimination and Equality •Draft Law on the Enforcement Oversight Commission •Draft Law on Foreigners and International Protection •Action Plan on the Prevention of Human Rights Violations •Revision of the 2009 Judicial Reform Strategy •Project on “Freedom of Expression and the Media in Turkey“ •Project on “Improving the efficiency of the Turkish Criminal Justice System” •Project on “Raising Awareness of Judges and Prosecutors regarding the Court Judgments” Put an End to  Torture and  Maltreatment Started  Compensation  for Terror Victims
    • Lifted Restrictions on the Use of Kurdish Language Media Education Political  campaign Courts 14
    • 15 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 DetentionRate of Detention per year (%) Source: Ministry of Justice
    • JUDICIAL REFORM STRATEGY 16 Main  Objectives Improving people’s confidence in the system Strengthening independence & impartiality Enhancing efficiency and effectiveness Improving professionalism & the system of management Continuing the legislative works on EU harmonization  Almost 70% of the Strategy Paper has been put in action 
    • Turkey continues its reform process 17 Reform agenda in line with the  objective of full compliance to the  Copenhagen Political Criteria Working on a  New Civil Constitution
    • Economic Stability 18
    • Price Stability Source: TURKSTAT, Medium‐Term Program 19 (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 Budget Deficit‐to‐GDP, % 20 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 21
    • 22 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 PublicSectorNet Debt(%, 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 23 Source: Treasury Net PublicExternalDebt(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 24
    • Challenges, Priories & Reform Agenda 25
    • C/A Deficit  as a Source of Vulnerability 26
    • Current Account Deficit is Large, but (12 Month Rolling, USD bn) Source: CBRT Manageable 27 ‐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 28
    • 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 Flexible Exchange Rate 29 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 30 (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 12/21/2007 3/21/2008 6/21/2008 9/21/2008 12/21/2008 3/21/2009 6/21/2009 9/21/2009 12/21/2009 3/21/2010 6/21/2010 9/21/2010 12/21/2010 3/21/2011 6/21/2011 9/21/2011 12/21/2011 3/21/2012 6/21/2012 9/21/2012 12/21/2012 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 31
    • 9 30 0 5 10 15 20 25 30 35 2002 2012 Number of Products over $1 billion Diversified Product Bundle Source: TURKSTAT 32
    • Solid Fiscal Position 33 ‐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 Budget Deficit‐to‐GDP, % (2012) Source: iMF, EC, Ministry of Development
    • Well‐Capitalized Banking SectorCapital Adequacy Ratio, % Target Rate 12%  Legal Rate 8%  Source: BRSA 34 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 Return on Equity* (%) 35 15.8 ‐35 ‐25 ‐15 ‐5 5 15 25 Czech Republic Australia Canada Brazil TURKEY Germany Finland France United States Austria Japan Netherlands United Kingdom Belgium Denmark Italy Portugal Spain Greece NPL Ratioof Loans(%) 2002 2013‐4 17.6 3.0 2007‐12 ROE  in Turkish banks around 20%
    • Low Household Leverage Source: CBRT, ECB (Household Liabilities, % of GDP, 2012) 36 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 37 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 (Corporate liabilities, %, GDP) Source: CBRT, Cetinkaya, March 2013, BRSA
    • (%) 10 12 14 16 18 20 22 24 26 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Current Account is a Structural Problem Source: Ministry of Development 38
    • ‐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 39
    • 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 40
    • 41 Reconciliation Process
    • Lost Decades 42 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  43 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 44
    • 45 Enhancing Human Capital Stock
    • Students (%, Total Population) 46 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 United Kingdom Italy Spain Poland Romania Turkey Netherlands Greece Belgium Portugal Czech Republic 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 47Source: 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% 48
    • Investment in Education Over the last  decade, we have • Built 188,000  classrooms • Hired 357,000 teachers 49 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 50
    • Source: OECD, PiSA 2009 PISA Results ‐ Mathematics 43rd (among 65 countries) 51 445 350 375 400 425 450 475 500 525 550
    • Source: OECD, PiSA 2009 PISA Results ‐ Science 43rd (among 65 countries) 52 454 350 370 390 410 430 450 470 490 510 530 550 Korea Estonia Germany Liechtenstein Slovenia Poland Hungary France İtaly Croatia Russia Greece Turkey Bulgaria Mexico Brazil Argentina Indonesia
    • Improving Quality of Education With Fatih Project, we are providing our children with Broadband Internet Access Smart Boards Tablet PCs Other information Technology Tools 53
    • Source: OECD Fatih to help FURTHER reduce the Gap between Turkey & OECD (PISA Results) 54 30 40 50 60 70 80 science math 2006 2009
    • Combatting the Shadow Economy 55
    • Informal Employment 56 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 2013 February Source:TURKSTAT (%, Total Employment)
    • 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 57 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 Czech Rep. Slovak Rep. Sweeden Norway Denmark Finland Germany Ireland France UK Netherland Luxemburg Austria Switzerland Source: Schneider, 2013 58 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 59
    • Improving Labor Market Flexibility 60
    • Low Employment Rate Early retirement Low rate of female labor  force participation Rigidities in labor force  market  61
    • 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 62
    • Labor Participation Rate, Female OECD Average: 62.3 Source: TURKSTAT, OECD 63 LaborParticipationRate byEducation (2013  February) 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 64
    • Source: OECD Highest among OECD countries 65 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 Republic Israel Slovak Republic Poland Iceland Slovenia Hungary Portugal Chile Canada Estonia Spain France Austria Italy New Zealand Finland Luxembourg Belgium Sweden United Kingdom Australia Germany Switzerland Ireland Norway Denmark Netherlands Highest among OECD countries
    • Narrowing Regional Development Gaps 66
    • 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 67
    • 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 68
    • 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 69
    • 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 70
    • 71 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 72
    • Source: The Scientific and Technological Council of Turkey R&D Spending 73 • 3.00%2023 • 0.86%2011 • 0.53%2002
    • Industrial Design Applications 41,226 applications in 2012 Up by 103% since 2002 Source: TPi 74
    • Trade Mark Applications Source: TPi • 36,578 2002 • 109,767 2012 75
    • Patent  Applications Source: TPi 76 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
    • 77 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 78
    • Restructuring of Borsa Istanbul Regional  Leadership Raising  Market  Cap/GDP to 80% 1,000 new  companies to be listed 79
    • Increasing Savings: Private Pensions 25% State Contribution Penalty for Early  Withdrawals 80
    • incentives for Global Fund Managers A tax free environment for  Global Funds Making it easier to manage assets  in Turkey 81
    • 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 82
    • Incentives for Business Angels 83
    • 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   84
    • 85 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) 86
    • 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 87Source: 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) 88
    • 89 Reducing Energy import Bill
    • Source: TURKSTAT, Bloomberg Energy Import Bill (Brent, $ pbl) Energy Imports (Billion Dollars) 90 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 91
    • 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 92
    • 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 93
    • Building the Nuclear Capacity 94 Akkuyu:  JW with Russia Sinop JW with a Japanese‐French consortium Working on a 3rd plant
    • Improving Energy Efficiency 95 Industry  20% Transportation  15% Construction  30%
    • Privatization • Distributions: Almost done 96 Hamitabat Termal Power Plant Seyitömer Termal Power Plant Kangal Termal Power Plant • Generation: 16,530MW on sale
    • Coal 97 $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 98
    • Turkey’s Strong Long‐Term Prospects 99
    • GDP Source: TURKSTAT, MTP, PwC 2002 2050 2002 $ 230  billion 2050 $ 5 trillion 2012 $ 786 billion 2023 $ 2 trillion 100
    • GDP per Capita Source: TURKSTAT, MTP,PwC 2002 2050 2002 $ 3,492 2012 $10,504 2023  $ 25,000 2050 $ 50,000 101
    • 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 Unemployment Rate (%) 0.9 pts 1.2 pts 2.2 pts 102
    • Exports 103 (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’t Budget Deficit‐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 104
    • Determinants of Long‐Term Growth Quality of Institutions Demographics Productivity 105
    • Improving Quality of Institutions Combatting  corruption Creating a level  playing field Improving  international  competitiveness 106
    • 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 107
    • 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 108
    • 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) 109
    • (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 110
    • (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 111
    • (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 112
    • Favorable Demographics Source: Eurostat Share of 15‐24 years old in Total Pop. (%) 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 113
    • Annual Average Population Growth Rate  (%, 2001‐11)Growth Rate of Working‐Age Population Source: OECD, Eurostat, TURKSTAT 114 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? 115
    • International Companies Operating in Turkey  (1000s) Source: Ministry of Economy 116 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 (Billion dollar) 14.8 122.8 0 20 40 60 80 100 120 140 1980‐2002 2003‐2012 117
    • REER Appreciation Source: CBRT (2003=100) 118 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… 119