Turkey’s Economic & Political Outlook
May 6, 2014
Mehmet Şimşek
Minister of Finance
1
Is political stability at stake?
Low growth – the new normal?
Is inflation getting out of control?
Turkey’s soft spot - ge...
Is political stability at stake?
3
Importance of Political Stability
4
Political Stability
Political Stability
5
15 Months
138 Months
0
20
40
60
80
100
120
140
Average Lifetime of Governements during 1950-2002 AK ...
Key Messages from the Ballot Box
Political Stability is here to stay
Corruption allegations were politically motivated
Pre...
Local Election Results
Source: Anadolu Agency
AK PARTY: Justice and Development Party
CHP: Republican People’s Party
MHP: ...
2 More Elections Ahead
Presidential
• August 2014
Parliamentary
• June 2015
8
Low growth – the new normal?
9
Real GDP
Source: Turkstat, Eurostat
120
100.0
85
90
95
100
105
110
115
120
Q1-08
Q2
Q3
Q4
Q1-09
Q2
Q3
Q4
Q1-10
Q2
Q3
Q4
Q1...
Real GDP: Turkey vs AMs
Source: Turkstat, Eurostat
120
98
100.0
106
85
90
95
100
105
110
115
120
Q1-08
Q2
Q3
Q4
Q1-09
Q2
Q...
12
Real GDP: Turkey vs EMs
Source: TURKSTAT, IMF
168.8
100.0
152.8
153.0
180.4
159.0
143.8
95
105
115
125
135
145
155
165
...
Upside
• Stronger external demand
• EU pulling out of recession
• Arab Spring becoming less
disruptive
• TL depreciation
D...
Softening Domestic Demand
14
Source: Turkstat, BRSA
0
5
10
15
20
25
30
35
40
45
55
60
65
70
75
80
85
Jan-08
Apr-08
Jul-08
...
15
Source: Bloomberg, Turkstat
Index(monthly)
(6monthrolling)
20
22
24
26
28
30
32
34
36
30
35
40
45
50
55
60
65
Jan-09
Ap...
Strong Manufacturing Output
16
Note: INDEX= 100 : A stable outlook to the economic activity by the real sector agents cove...
PMI remains above 50
17Source: Turkstat, HSBC
30
35
40
45
50
55
60
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08...
Job Creation
Employmentsince2007(mnpeoples.a.)
Source:TURKSTAT 18
26.1
20
21
22
23
24
25
26
27 Jan-08
Apr-08
Jul-08
Oct-08...
Unemployment & Labor Participation Rate
Source:TURKSTAT
45
46
47
48
49
50
51
52
8
9
10
11
12
13
14
15
16
Jan-08
May-08
Sep...
Is Inflation Getting out of Control?
20
Inflation
0
20
40
60
80
100
120
140
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1...
CBRT’s Inflation Outlook
22
Inflation is to resume downward trend as base effects fade
Source: CBRT
Upside
• TL Depreciation
• Unprocessed food prices
Downside
• Monetary Tightening
• Output Gap
• Recent Macroprudential Me...
(%)
Tight Monetary Policy
Source: CBRT
24
8.00
12.00
10.00
3
5
7
9
11
13
15
Oct-11
Oct-11
Nov-11
Dec-11
Jan-12
Jan-12
Feb-...
(%)
25
Kaynak: TCMB
Interest Rates on Turkish Lira Bank Loans
7
9
11
13
15
17
19
21
23
25
27
29
January-08
April-08
July-0...
Macroprudential Measures
• Single limit for all credit cards
• Higher minimum payment
• Limit on # of installments
Credit ...
27
Source: CBRT
Credit Growth
13weekmovingavg.,y-on-y%
* Credit Growth is adjusted for exchange rate movements
13.1
0
5
10...
Turkey’s Soft Spot – Getting Fixed?
28
Current Account Deficit is Large, but...(%ofGDP)
Source: CBRT
29
Net Gold Exports
• 2011: -$4.8 billion
• 2012: +$5.7 bill...
It’s partially due to Cyclical Factors
Euro crisis
Energy prices
Arab Spring
30
Strong
Domestic
Demand
Gross External Debt - Manageable
31
(2013,%,GDP)
Source: IMF, World Bank
97.6
81.2
73.8
72.9
68.5
68.3
47.3
46.4
38.7
35.1...
Outlook for C/A Deficit
• Europe pulling out of recession
• Tighter monetary policy
• Softening domestic demand
• Exchange...
FX Short Positions – Should we be worried?
33
Turkey's FX Position
Source: CBRT, BRSA, Treasury
* Assets: CBRT FX Deposits of Treasury+ CBRT Foreign Assets; Liabilities...
Firms
Source: CBRT
No FX
Loans
63%
FX Loan w/
export earning
25%
FX Loan w/o
export earning
12%
9,500 firms
Total net sale...
Firms: SMEs and Large Companies
Source: CBRT 36
149
50
70
90
110
130
150
170
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Ju...
Households: Low Leverage
Source: CBRT, ECB
(HouseholdLiabilities,%ofGDP,June2013)
No FX exposure
65
23
20 40 60 80 100 120...
Banks: Safe & Sound
CapitalAdequacyRatio,%
2002 Feb-14
17.6
2.8
NPLRatioofLoans(%)
15.5
0
5
10
15
20
25
Jan-08
May-08
Sep-...
Turkey’s Banks - among the Strongest in EMs
40
Source: World Bank
Source: World Bank, IMF, BRSA
Banking Sector: Able to Absorb Shocks
Arm
Br
Bul
Col
Cro
Egy
Fr
Gre
Indo
Ire
Ita
Latv
Leb
Li...
Fiscally:
Room to Manoeuvre
42
10.8
7.9
4.1
0.1
-1.3
0.2
1.6
5.5
3.0
0.4
1.0 1.0 1.1
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2002 2003 2004 2005 2006 2007 200...
Budget Deficit (2014)BudgetDeficit-to-GDP,%
Source: IMF, OECD, Ministry of Development
4.0
2.9
2.3
1.1
0.5
1
1.5
2
2.5
3
3...
Source: IMF
Fiscal Strength in EMsGrossPublicDebt/GDP(%)
Fiscal Deficit /GDP (%)
Arm
Br
Bul
Col
Cro
Fr
Hun
Indo
Ire
Latv
L...
74.0
67.7
59.6
52.7
46.5
39.9
40.0
46.1
42.3
39.1
36.2 36.3
33.0
25
30
35
40
45
50
55
60
65
70
75
2002 2003 2004 2005 2006...
Public Debt (2014)
Source: IMF, OECD, Treasury
Debt-to-GDP,%
111.8
89.0
33.3 33.0
20
30
40
50
60
70
80
90
100
110
120
OECD...
48
(%)
Real & Nominal Interest Rates on Gov’t Debt
Source: Treasury
62.7
7.7 11.1
25.4
0.2 2.5
-5
5
15
25
35
45
55
65
2002...
(%)
Interest Payments
85.7
14.9
43.2
11.9
0
10
20
30
40
50
60
70
80
90
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2...
Structural Reforms & Priorities
50
Chapter- 1
Reducing
Energy
Import Bill
Moving
up the
Value-
Chain
Enhancing
Human
Capital
Stock
Increasing
Labor
Market
Fl...
Reducing Energy Import Bill
52
High Dependence on Energy Imports
72%
Total Energy
92%
Oil
98%
Natural-Gas
53
Source: TURKSTAT, Bloomberg
Energy Import Bill
(Brent,$pbl)
EnergyImports(BillionDollars)
54
Energy Prices Look Set to Soften in the Long-Run
BRIC slowing down
Renewables
Shale gas revolution
Energy
efficiency gains...
Energy Prices
56
95
100
105
110
115
120
125
75
80
85
90
95
100
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024...
Developing Local & Renewable Resources
Source: Ministry of Energy and Natural Resources
Electricity Generation Installed C...
Renewable Energy OutlookOverthenext
decadeinTurkey,
• 20,000 MW, wind power generation
• 3,000 MW, solar power plants
• 60...
59
0
6
12
18
24
2010 2011 2012 2013
Module Inverter Other Hardware Soft Cost
Costofelectricity,centsperkWh
Source: DOE/NRE...
Turkey’s Solar Energy Potential Atlas
60
Building Nuclear Capacity
Akkuyu:
JW with Russia
Sinop
JW with a Japanese-French consortium
Working on a 3rd plant
61
Improving Energy Efficiency
Industry
20%
Transportation
15%
Construction
30%
62
Moving up the Value-Chain
63
High Added Value in Exports
Strengthening the link b/w commerce and R&D
Value of export
products per kg
Turkey
$1.58
South...
Source: The Scientific and Technological Council of Turkey
R&D Spending
•3.00%2023
•1.8%2018
• 0.92%2012
• 0.53%2002
65
Industrial Design Applications
45,091 applications in 2013
Up by 122% since 2002
Source: Turkish Patent Institute
66
Trade Mark Applications(2012,Thousand)
108*
86
64
54
44
41
17 16 14 14
0
20
40
60
80
100
120
TURKEY
France
Germany
Italy
S...
Patent Applications
Source: Turkish Patent Institute
1.874*
12.053*
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
...
Enhancing Human Capital Stock
69
Students (%, Total Population)
39
22
15
20
25
30
35
40
45
Turkey EU
Source: TURKSTAT, Eurostat
Included Informal Education...
9.4
18
8
10
12
14
16
18
2002 2014
Source: Ministry of Finance
Share of Education in Budget%
71
Investment in Education
Over the last
decade, we have
• Built 205,000
classrooms
• Hired 410,000 teachers
Source: Ministry...
Gross Schooling Rates
Source: Ministry of Development
73
12 Years of Mandatory Education
Austral.
Austria
Belg.
Canada
Chile
Czech R.
Den.
Estonia
Finland
France
Italy
Japan
Lux
M...
2002
91.1 girls per
100 boys
2012
101.8 girls
per 100 boys
Improving Girls’ Education
75
Source: OECD
76
74
47
51
38
46
30
35
40
45
50
55
60
65
70
75
80
Science Math
2006 2009 2012
Improving Quality of Education...
Increasing Labor Market Flexibility
77
78
Labor Market
Improving labor market flexibility
Increasing female labor-force participation
Improving the relation b/w ...
Pensionable Age
41.0
44.9
61.9
63.3
30
35
40
45
50
55
60
65
Female Male
Turkey OECD
Source: OECD
79
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
CzechRe...
Labor Participation Rate, Female
Source: Fraker, A. and D. Ozdemir, 2011, “Female Labor Force Participation How Does Turke...
Source: TURKSTAT, Eurostat, WB
(2004=100)
75
80
85
90
95
100
105
110
115
120
125
130
2004 2005 2006 2007 2008 2009 2010 20...
SMEs Account for Much of Employment
83
(EmploymentbySize,%,2011)
Source: Turkstat
Classification, based on criteria that r...
Higher Labour Productivıty in Large Companies
84
(LaborProductivityofLargesttoSmallestEnterprises,%,2010)
Source: TURKSTAT...
Formal Employment rising with Education
85
Source: TURKSTAT
No education
Primary
Lower secondary
Upper secondary
Tertiary
...
Chapter- 2
Deepening
Capital
Markets
Combatting
Shadow
Economy
Improving
Infrastructure
Reducing
Regional
Development
Gaps...
Deepening Capital Markets
87
Capital Markets
Source: CMB, Borsa Istanbul
Data as of October 2013.
*18.04.2014
**18.04.2014
***2013
88
More than 1
milli...
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
90
2009
72nd
2014
47th
2018
25th
Global Financial Centres Index
Source: Global Financial Centres Index 15
45
47
60
63
70
75
7...
Increasing Savings: Private Pensions
25% State
Contribution
1.3 million
new
participants
and TL7.1bn
funds since
end-2012
...
Incentives for Global Fund Managers
A tax free environment for
global funds
Making it easier to manage assets
in Turkey
93
Incentives for Venture Capital
Allowing contributions to Venture Capital to be
deducted from Corporate & Personal Income T...
Incentives for Business Angels
95
Entrepreneurial Spirit & Talent
96
Source: World Bank calculation
Combatting Shadow Economy
97
52.1
51.7
50.1
48.2
47.0
45.4
43.5 43.8
43.3
42.1
39.0
36.7
33.6
30
35
40
45
50
55 2002
2003
2004
2005
2006
2007
2008
2009...
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)
Source: Schneider, 2013
But still higher than EU average
31.2
28.4
28.4
28.0
27.6
26.5
25....
Improving Infrastructure
101
1,714 Km
Total of Motorways
4,387 Km
Total of State and
Provincial Dual
Carriageways
Total: 6,101 Km
January 2003
2,244 Km...
İSTANBUL
EDİRNE
ESKİŞEHİR
Polatlı
ANKARA
KONYA
İZMİR
SİVAS
AFYONKARHİSAR
KAYSERİ
BURSA ERZİNCAN
ERZURUM
KARS
MERSİN ADANA
...
• The number of airports serving
scheduled flights = 262003
• The number of airports serving
scheduled flights = 522013
Ac...
İstanbul
Antalya
İzmir
Gaziantep
Trabzon
Kayseri
Samsun
Erzurum
Kars
Van
Diyarbakır
Malatya
Dalaman
Bodrum
Sivas
Elazığ
Bu...
2003
60 Points
SunExpressPegasus
ATLAS JET Onur Air
2013
236 Points
THY
THY
SunExpress
International Flights
294% Expansio...
Improving Social Equity
107
Southeast Anatolian Project
₺36.1 bn invested in Southeast Anatolian Project
during 2003-13
22 dams, almost completed
416 ...
East Anatolian Project (DAP)
Source: Ministry of Development Division of GAP Administration
1.2 mn jobs
created
A $1.4bn
c...
Konya Plain Project (KOP)
14
irrigation
3
drinking
water
1 energy
18 GREAT
PROJECTS
110
Income Growth: Faster in Poorer Regions
111
Source: TURKSTAT,
Istanbul
West Marmara
Aegean
East Marmara
West Anatolia
Medi...
More Inclusive Growth
112
RealHouseholdIncomeGrowth(%,2006-12)
Household Income Deciles
Source: TURKSTAT
32.3
26.4
20.9
19...
Middle Class*: Expanding in line with Rising GDP
113
Source: Azevedo and Atamanov (2014)
* Middle class is every person wi...
Inclusive Growth: Better Public Services
114
Source: Turkstat
(SatisfactionfromPublicServicesinGeneral,%)
40.2
48.7
39.5
6...
Inclusive Growth: Improving Living Standarts
115
38
10
20
77
5
0
5
10
15
20
25
30
35
40
1990 2000 2010
Infant mortality ra...
Strong Long-Term Prospects
116
GDP per Capita
Low-Income
$1,035-or less
Lower-Middle-Income
$1,036-$4,085
Upper-Middle-Income
$4,086-$12,615
117
High-Inc...
Priorities for Sustainable Growth
Improving
Competitiveness
Innovation-based
Growth
Attracting FDI
Financial deepening
R&D...
Achieving Sustainable Development
10th Development Plan
(2014-18)
Qualified
Individiuals,
Stronger Society
Innovative
Prod...
Determinants of Long-Term Growth
Quality of Institutions
Demographics
Productivity
120
Improving Quality of Institutions
Corruption
Perceptions:
2013: 53rd in 177
2002: 65th in 102
Ease of Doing
Business:
2013...
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 (2013)
(53rd among 177 countries)
Source: Transparency International
53
69
72
80 80
94
106 10...
Within the period of 2005-2012, Turkey has ranked higher than Russia, Argentina and Greece.(71st among 117 countries)
31
3...
(44th among 148 countries)
Source: World Economic Forum
Global Competitiveness Index (2013)
29
38
42 44
49
51
55
56
60
63
...
(84th among 175 countries)
Source: World Bank
Ease of Doing Business (2006)
62
69 70
71
84
93
97
108
111
122
131
132 134
1...
(69th among 189 countries)
Source: World Bank
Ease of Doing Business (2013)
53
65
69
72 73
88 89
92
96
112
116
120 126
134...
Favorable Demographics
Source: Eurostat
Shareof15-24yearsoldinTotalPop.(%)
16.6
7 9 11 13 15 17 19 21
Spain
Italy
Andorra
...
1.7
0.7
0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
TURKEY OECD EU-28
AnnualAverageGrowthRate(%,2001-13)
Working Age Popul...
Thank You…
130
Upcoming SlideShare
Loading in …5
×

Turkey’s Economic & Political Outlook (Emerging and Frontier)

1,045 views

Published on

Published in: Business, Technology
  • Be the first to comment

Turkey’s Economic & Political Outlook (Emerging and Frontier)

  1. 1. Turkey’s Economic & Political Outlook May 6, 2014 Mehmet Şimşek Minister of Finance 1
  2. 2. Is political stability at stake? Low growth – the new normal? Is inflation getting out of control? Turkey’s soft spot - getting fixed? A few Questions of Interest 2
  3. 3. Is political stability at stake? 3
  4. 4. Importance of Political Stability 4 Political Stability
  5. 5. Political Stability 5 15 Months 138 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 2002-14 Political Stability 2023 Vision
  6. 6. Key Messages from the Ballot Box Political Stability is here to stay Corruption allegations were politically motivated President is likely to be elected in the first round 6
  7. 7. Local Election Results Source: Anadolu Agency AK PARTY: Justice and Development Party CHP: Republican People’s Party MHP: Nationalist Movement Party BDP: Peace and Democracy Party (%) 38.8 23.1 16.1 5.7 16.3 45.5 27.8 15.2 4.2 7.3 0 5 10 15 20 25 30 35 40 45 50 AK PARTY CHP MHP BDP Others 2009 2014 7
  8. 8. 2 More Elections Ahead Presidential • August 2014 Parliamentary • June 2015 8
  9. 9. Low growth – the new normal? 9
  10. 10. Real GDP Source: Turkstat, Eurostat 120 100.0 85 90 95 100 105 110 115 120 Q1-08 Q2 Q3 Q4 Q1-09 Q2 Q3 Q4 Q1-10 Q2 Q3 Q4 Q1-11 Q2 Q3 Q4 Q1-12 Q2 Q3 Q4 Q1-13 Q2 Q3 Q4 RealGDP(2007Q4=100,s.a.) 10
  11. 11. Real GDP: Turkey vs AMs Source: Turkstat, Eurostat 120 98 100.0 106 85 90 95 100 105 110 115 120 Q1-08 Q2 Q3 Q4 Q1-09 Q2 Q3 Q4 Q1-10 Q2 Q3 Q4 Q1-11 Q2 Q3 Q4 Q1-12 Q2 Q3 Q4 Q1-13 Q2 Q3 Q4 RealGDP(2007Q4=100,s.a.) TURKEY US Euro Area 11
  12. 12. 12 Real GDP: Turkey vs EMs Source: TURKSTAT, IMF 168.8 100.0 152.8 153.0 180.4 159.0 143.8 95 105 115 125 135 145 155 165 175 185 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Turkey Emerging & Developing Europe LatAm. & the Caribbean Developing Asia excl. China & India Russia South Africa TURKEY RealGDP(2002=100)
  13. 13. Upside • Stronger external demand • EU pulling out of recession • Arab Spring becoming less disruptive • TL depreciation Downside • Tighter financial conditions • Geopolitical tensions Growth Outlook 13
  14. 14. Softening Domestic Demand 14 Source: Turkstat, BRSA 0 5 10 15 20 25 30 35 40 45 55 60 65 70 75 80 85 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Consumer Confidence (Left) Total Credit Growth (Right) (Annual,%) (Index)
  15. 15. 15 Source: Bloomberg, Turkstat Index(monthly) (6monthrolling) 20 22 24 26 28 30 32 34 36 30 35 40 45 50 55 60 65 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Eurozone Manufacturing PMI Turkey's Exports to Europe Strenghtening External Demand
  16. 16. Strong Manufacturing Output 16 Note: INDEX= 100 : A stable outlook to the economic activity by the real sector agents covered by the Business Tendency Survey. INDEX > 100 : An optimistic outlook to the economic activity by the real sector agents covered by the Business Tendency Survey. INDEX < 100 : A pessimistic outlook to the economic activity by the real sector agents covered by the Business Tendency Survey. Source: Turkstat, CBT 100 80 85 90 95 100 105 110 115 120 125 130 55 60 65 70 75 80 85 90 95 100 105 110 115 120 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Real Sector Confidence Index (Left) (s.a.) Industrial Production (Right) (s.a.)
  17. 17. PMI remains above 50 17Source: Turkstat, HSBC 30 35 40 45 50 55 60 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14
  18. 18. Job Creation Employmentsince2007(mnpeoples.a.) Source:TURKSTAT 18 26.1 20 21 22 23 24 25 26 27 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14
  19. 19. Unemployment & Labor Participation Rate Source:TURKSTAT 45 46 47 48 49 50 51 52 8 9 10 11 12 13 14 15 16 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 Unemploymen Rate (Left Axis) Labor Force Participation Rate (Right Axis) (s.a.,%) (s.a.,%) 19
  20. 20. Is Inflation Getting out of Control? 20
  21. 21. Inflation 0 20 40 60 80 100 120 140 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 Source: TURKSTAT (CPI,Annual,%) 21
  22. 22. CBRT’s Inflation Outlook 22 Inflation is to resume downward trend as base effects fade Source: CBRT
  23. 23. Upside • TL Depreciation • Unprocessed food prices Downside • Monetary Tightening • Output Gap • Recent Macroprudential Measures Inflation Outlook 23
  24. 24. (%) Tight Monetary Policy Source: CBRT 24 8.00 12.00 10.00 3 5 7 9 11 13 15 Oct-11 Oct-11 Nov-11 Dec-11 Jan-12 Jan-12 Feb-12 Mar-12 Apr-12 Apr-12 May-12 Jun-12 Jul-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Nov-12 Dec-12 Jan-13 Jan-13 Feb-13 Mar-13 Apr-13 May-13 May-13 Jun-13 Jul-13 Aug-13 Aug-13 Sep-13 Oct-13 Nov-13 Nov-13 Dec-13 Jan-14 Feb-14 Feb-14 Mar-14 Apr-14 CBRT Funding Rate O/N Borrowing O/N Lending Policy Rate
  25. 25. (%) 25 Kaynak: TCMB Interest Rates on Turkish Lira Bank Loans 7 9 11 13 15 17 19 21 23 25 27 29 January-08 April-08 July-08 October-08 January-09 April-09 July-09 October-09 January-10 April-10 July-10 October-10 January-11 April-11 July-11 October-11 January-12 April-12 July-12 October-12 January-13 April-13 July-13 October-13 January-14 April-14 Personal Vehicle Housing Commercial
  26. 26. Macroprudential Measures • Single limit for all credit cards • Higher minimum payment • Limit on # of installments Credit card loans • Higher risk weighting for consumer loans Consumer loans • Compulsory advance payment • Term limit for vehicle and consumer loans Auto & other consumer loans • Lower risk weighting for SME & export credits Other Loans 26
  27. 27. 27 Source: CBRT Credit Growth 13weekmovingavg.,y-on-y% * Credit Growth is adjusted for exchange rate movements 13.1 0 5 10 15 20 25 30 35 40 45 Jan-11 Feb-11 Mar-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Agu-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14
  28. 28. Turkey’s Soft Spot – Getting Fixed? 28
  29. 29. Current Account Deficit is Large, but...(%ofGDP) Source: CBRT 29 Net Gold Exports • 2011: -$4.8 billion • 2012: +$5.7 billion • 2013: -$11.8 billion • 2014 Jan-Mar: $1.7 billion
  30. 30. It’s partially due to Cyclical Factors Euro crisis Energy prices Arab Spring 30 Strong Domestic Demand
  31. 31. Gross External Debt - Manageable 31 (2013,%,GDP) Source: IMF, World Bank 97.6 81.2 73.8 72.9 68.5 68.3 47.3 46.4 38.7 35.1 34.8 30.4 24.2 22.0 20 30 40 50 60 70 80 90 100 Bulgaria Ukraine Poland Romania Lithuania Macedonia Turkey Chile SouthAfrica Israel SouthKorea Indonesia India Brazil
  32. 32. Outlook for C/A Deficit • Europe pulling out of recession • Tighter monetary policy • Softening domestic demand • Exchange rate weakness • Relatively more stable MENA region • Gold imports likely to fall • Higher tourism revenues Significant adjustment is likely 32
  33. 33. FX Short Positions – Should we be worried? 33
  34. 34. Turkey's FX Position Source: CBRT, BRSA, Treasury * Assets: CBRT FX Deposits of Treasury+ CBRT Foreign Assets; Liabilities= Public gross external debt+CBRT Liabilities to Non Residents. Data from CBT dated 29 Apr., 2014; data from gross external debt stock as of Q4-13 ** Data - Feb. 2014 *** Data - Jan 2014 **** Data - Mar. 2013 *****Data-18.04.2014 Billion $ Assets Liabilities Net Position Public Sector* 137,7 122,9 14,7 Banking Sector** 477,9 472,2 0,7 Real Sector*** 92,7 265,4 -172,8 Short Term 77,3 94,2 -16,9 Household**** 191,0 0,5 190,5 FX Deposit ***** 84,4 34
  35. 35. Firms Source: CBRT No FX Loans 63% FX Loan w/ export earning 25% FX Loan w/o export earning 12% 9,500 firms Total net sales at 71% of GDP. 35
  36. 36. Firms: SMEs and Large Companies Source: CBRT 36
  37. 37. 149 50 70 90 110 130 150 170 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Foreign Currency Deposits of Residents Source: CBRT (Billion$) 37
  38. 38. Households: Low Leverage Source: CBRT, ECB (HouseholdLiabilities,%ofGDP,June2013) No FX exposure 65 23 20 40 60 80 100 120 140 Denmark Netherlands Ireland United Kingdom Portugal Sweden Spain Finland Euro Area Greece Malta Germany France Luxembourg Belgium Austria Italy Estonia Poland Czech Republic Latvia Slovenia Hungary Slovakia Lithuania Turkey 38
  39. 39. Banks: Safe & Sound CapitalAdequacyRatio,% 2002 Feb-14 17.6 2.8 NPLRatioofLoans(%) 15.5 0 5 10 15 20 25 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 Legal Rate: %8 Target Rate 12% Source: BRSA 39
  40. 40. Turkey’s Banks - among the Strongest in EMs 40 Source: World Bank
  41. 41. Source: World Bank, IMF, BRSA Banking Sector: Able to Absorb Shocks Arm Br Bul Col Cro Egy Fr Gre Indo Ire Ita Latv Leb Lith Mex Phil Pol Rom Rus Serb SoAf Sp Tu Ukr Venz 8 10 12 14 16 18 20 22 0 50 100 150 200 250 Private Credit/GDP (%) CAR(%) 41
  42. 42. Fiscally: Room to Manoeuvre 42
  43. 43. 10.8 7.9 4.1 0.1 -1.3 0.2 1.6 5.5 3.0 0.4 1.0 1.0 1.1 -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 Maastricht Criteria: 3% Achieved Maastricht Criteria except 2009 Source: Ministry of Development BudgetDeficit-to-GDP,% Low Deficit 43
  44. 44. Budget Deficit (2014)BudgetDeficit-to-GDP,% Source: IMF, OECD, Ministry of Development 4.0 2.9 2.3 1.1 0.5 1 1.5 2 2.5 3 3.5 4 4.5 OECD EU-28 EMs Turkey 44
  45. 45. Source: IMF Fiscal Strength in EMsGrossPublicDebt/GDP(%) Fiscal Deficit /GDP (%) Arm Br Bul Col Cro Fr Hun Indo Ire Latv Lith Mex Phil Pol Rom Rus Serb Slvk Slov SoAf Sp Tu 0 20 40 60 80 100 120 140 0 1 2 3 4 5 6 7 8 9 45
  46. 46. 74.0 67.7 59.6 52.7 46.5 39.9 40.0 46.1 42.3 39.1 36.2 36.3 33.0 25 30 35 40 45 50 55 60 65 70 75 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Lower Public Debt Debt-to-GDP,% Satisfying Maastricht Criteria since 2004 Maastricht Criteria: 60% Source: Treasury 46
  47. 47. Public Debt (2014) Source: IMF, OECD, Treasury Debt-to-GDP,% 111.8 89.0 33.3 33.0 20 30 40 50 60 70 80 90 100 110 120 OECD EU EMs Turkey 47
  48. 48. 48 (%) Real & Nominal Interest Rates on Gov’t Debt Source: Treasury 62.7 7.7 11.1 25.4 0.2 2.5 -5 5 15 25 35 45 55 65 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mar-14 Interest Rate Real Interest Rate
  49. 49. (%) Interest Payments 85.7 14.9 43.2 11.9 0 10 20 30 40 50 60 70 80 90 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Interest Payments/Tax Revenues Interest Payments/Budget Expenditures Source: Ministry of Finance 49
  50. 50. Structural Reforms & Priorities 50
  51. 51. Chapter- 1 Reducing Energy Import Bill Moving up the Value- Chain Enhancing Human Capital Stock Increasing Labor Market Flexibility 51
  52. 52. Reducing Energy Import Bill 52
  53. 53. High Dependence on Energy Imports 72% Total Energy 92% Oil 98% Natural-Gas 53
  54. 54. Source: TURKSTAT, Bloomberg Energy Import Bill (Brent,$pbl) EnergyImports(BillionDollars) 54
  55. 55. Energy Prices Look Set to Soften in the Long-Run BRIC slowing down Renewables Shale gas revolution Energy efficiency gains 55
  56. 56. Energy Prices 56 95 100 105 110 115 120 125 75 80 85 90 95 100 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Index,2010=100 Brent$/bbl,2010Prices Crude oil, avg spot (lhs) Energy Prices (rhs) Source: World Bank
  57. 57. Developing Local & Renewable Resources Source: Ministry of Energy and Natural Resources Electricity Generation Installed Capacity MW % of Total Current Installed Capacity (2013) 64,044 - Renewable Energy 25,596 40.0 Power Plants Under Construction 14,338 - Renewable Energy 10,804 75.4 In 3-to-5 years 78,382 - Renewable Energy 36,401 46.4 57
  58. 58. Renewable Energy OutlookOverthenext decadeinTurkey, • 20,000 MW, wind power generation • 3,000 MW, solar power plants • 600 MW, geothermal power plants • An energy stock market to be established 58
  59. 59. 59 0 6 12 18 24 2010 2011 2012 2013 Module Inverter Other Hardware Soft Cost Costofelectricity,centsperkWh Source: DOE/NREL The Falling Price of Utility-scale Polar Photovoltaic Projects
  60. 60. Turkey’s Solar Energy Potential Atlas 60
  61. 61. Building Nuclear Capacity Akkuyu: JW with Russia Sinop JW with a Japanese-French consortium Working on a 3rd plant 61
  62. 62. Improving Energy Efficiency Industry 20% Transportation 15% Construction 30% 62
  63. 63. Moving up the Value-Chain 63
  64. 64. High Added Value in Exports Strengthening the link b/w commerce and R&D Value of export products per kg Turkey $1.58 South Korea $3.0 Turquality $3.28 Japan $3.5 Germany $4.1 64
  65. 65. Source: The Scientific and Technological Council of Turkey R&D Spending •3.00%2023 •1.8%2018 • 0.92%2012 • 0.53%2002 65
  66. 66. Industrial Design Applications 45,091 applications in 2013 Up by 122% since 2002 Source: Turkish Patent Institute 66
  67. 67. Trade Mark Applications(2012,Thousand) 108* 86 64 54 44 41 17 16 14 14 0 20 40 60 80 100 120 TURKEY France Germany Italy Spain UK Portugal Switzerland Norway Poland Source: Turkish Patent Institute *Turkey’s 2013 Data 67
  68. 68. Patent Applications Source: Turkish Patent Institute 1.874* 12.053* 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 2002 2013 68 (Annual,NumberofApplications)
  69. 69. Enhancing Human Capital Stock 69
  70. 70. Students (%, Total Population) 39 22 15 20 25 30 35 40 45 Turkey EU Source: TURKSTAT, Eurostat Included Informal Education 70
  71. 71. 9.4 18 8 10 12 14 16 18 2002 2014 Source: Ministry of Finance Share of Education in Budget% 71
  72. 72. Investment in Education Over the last decade, we have • Built 205,000 classrooms • Hired 410,000 teachers Source: Ministry of Education 72
  73. 73. Gross Schooling Rates Source: Ministry of Development 73
  74. 74. 12 Years of Mandatory Education Austral. Austria Belg. Canada Chile Czech R. Den. Estonia Finland France Italy Japan Lux Mex New Zeal. Poland Port. Spain Switz. TURKEY UK USA 6 7 8 9 10 11 12 13 14 9.5 9.7 9.9 10.1 10.3 10.5 10.7 10.9 11.1 11.3 11.5 AverageYearsatSchoolofPop’nover25Years Income per Capita (PPP, log) Source: OECD 74
  75. 75. 2002 91.1 girls per 100 boys 2012 101.8 girls per 100 boys Improving Girls’ Education 75
  76. 76. Source: OECD 76 74 47 51 38 46 30 35 40 45 50 55 60 65 70 75 80 Science Math 2006 2009 2012 Improving Quality of Education: PISA Results, Gap b/w Turkey & OECD 76
  77. 77. Increasing Labor Market Flexibility 77
  78. 78. 78 Labor Market Improving labor market flexibility Increasing female labor-force participation Improving the relation b/w education & employment Improving the relation b/w employment & social protection
  79. 79. Pensionable Age 41.0 44.9 61.9 63.3 30 35 40 45 50 55 60 65 Female Male Turkey OECD Source: OECD 79
  80. 80. 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 (2011,hour) OECD Average: 38.5 Source: OECD 80
  81. 81. Labor Participation Rate, Female Source: Fraker, A. and D. Ozdemir, 2011, “Female Labor Force Participation How Does Turkey Compare?”, TEPAV FemaleLaborParticipationRate(%) Income per Capita (log) 81
  82. 82. Source: TURKSTAT, Eurostat, WB (2004=100) 75 80 85 90 95 100 105 110 115 120 125 130 2004 2005 2006 2007 2008 2009 2010 2011 2012 TURKEY South Africa Croatia Hungary Poland Brazil Russian Federation Indonesia China Mexico India TURKEY Female Labor Participation Rates 82
  83. 83. SMEs Account for Much of Employment 83 (EmploymentbySize,%,2011) Source: Turkstat Classification, based on criteria that relate to the number of persons employed. 46.6 12.4 7.0 10.1 24.0 5 10 15 20 25 30 35 40 45 50 1-19 20-49 50-99 100-249 250+
  84. 84. Higher Labour Productivıty in Large Companies 84 (LaborProductivityofLargesttoSmallestEnterprises,%,2010) Source: TURKSTAT, OECD, Enterpreneurship at a Glance 2013 4.2 1 1 2 2 3 3 4 4 5 TURKEY Poland Hungary Portugal Italy Spain SlovakRep. Slovenia Belgium Switzerland Australia Austria Estonia Sweden Finland France Germany UK
  85. 85. Formal Employment rising with Education 85 Source: TURKSTAT No education Primary Lower secondary Upper secondary Tertiary 0 10 20 30 40 50 60 70 80 90 100 020406080100 (Informal Employment, %) (FormalEmployment,%)
  86. 86. Chapter- 2 Deepening Capital Markets Combatting Shadow Economy Improving Infrastructure Reducing Regional Development Gaps 86
  87. 87. Deepening Capital Markets 87
  88. 88. Capital Markets Source: CMB, Borsa Istanbul Data as of October 2013. *18.04.2014 **18.04.2014 ***2013 88 More than 1 million equity investors More than 3 million mutual fund investors More than 4.4 million private pension accounts** Nearly 172 thousand corporate bond holders 141 investment banks & brokerages Over $250bn market cap* 424 listed companies***
  89. 89. 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 89
  90. 90. Restructuring of Borsa Istanbul Regional Leadership Raising Market Cap/GDP to 80% 1,000 new companies to be listed 90
  91. 91. 2009 72nd 2014 47th 2018 25th Global Financial Centres Index Source: Global Financial Centres Index 15 45 47 60 63 70 75 77 20 30 40 50 60 70 80 Rio de Jeneiro ISTANBUL Warsaw Mauritius Mexico Prague Budapest 91
  92. 92. Increasing Savings: Private Pensions 25% State Contribution 1.3 million new participants and TL7.1bn funds since end-2012 92
  93. 93. Incentives for Global Fund Managers A tax free environment for global funds Making it easier to manage assets in Turkey 93
  94. 94. 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 94
  95. 95. Incentives for Business Angels 95
  96. 96. Entrepreneurial Spirit & Talent 96 Source: World Bank calculation
  97. 97. Combatting Shadow Economy 97
  98. 98. 52.1 51.7 50.1 48.2 47.0 45.4 43.5 43.8 43.3 42.1 39.0 36.7 33.6 30 35 40 45 50 55 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan.-2014 InformalEmployment(%ofTotalEmployment) Informal Employment Source:TURKSTAT 98
  99. 99. 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 Down 6 percentage points 99
  100. 100. Size of Shadow Economy (%, GDP) Source: Schneider, 2013 But still higher than EU average 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 19.0 18.6 18.4 16.4 15.5 15.0 13.9 13.6 13.0 13.0 13.0 12.2 9.9 9.7 9.1 8.0 7.5 5 10 15 20 25 30 35 Bulgaria Romania Crotia Latvia Estonia TURKEY Lithuania S.Cyprus Malta Poland Greece Slovenia Hungary Italy Portugal Spain EUAverage Belgium CzechRep. Slovakia Sweeden Norway Denmark Finland Germany Ireland France UnitedKingdom Netherlands Luxemburg Austria SizeofInformalEconomy(2013,%,GDP) 100
  101. 101. Improving Infrastructure 101
  102. 102. 1,714 Km Total of Motorways 4,387 Km Total of State and Provincial Dual Carriageways Total: 6,101 Km January 2003 2,244 Km Total of Motorways 20,807 Km Total of State and Provincial Dual Carriageways Total: 23,051 Km January 2014 102
  103. 103. İSTANBUL EDİRNE ESKİŞEHİR Polatlı ANKARA KONYA İZMİR SİVAS AFYONKARHİSAR KAYSERİ BURSA ERZİNCAN ERZURUM KARS MERSİN ADANA DİYARBAKIR ELAZIĞ MALATYA ZONGULDAK SAMSUN Bandırma VAN MUŞ BİLECİK ÇANKIRI KIRIKKALE TEKİRDAĞ İZMİT BALIKESİR AYDIN DENİZLİ BURDUR ISPARTA UŞAK MANİSA KARAMAN NİĞDE OSMANİYE K.MARAŞ AMASYA BATMAN MARDİN Yerköy KARABÜK Yenişehir Constructed (1.724 km) Under Construction (2.500 km) Bidding Phase (1.600 km) GAZİANTEP Çobanbey 1,724 km of railroad constructed since 2003 o.w. 1,366 km High Speed Train Lines High Speed Railway Projects 103
  104. 104. • The number of airports serving scheduled flights = 262003 • The number of airports serving scheduled flights = 522013 Active Airports in Turkey Airports serving Scheduled Flights (52) Airports under Construction (3) Airports Planned (1) 104
  105. 105. İstanbul Antalya İzmir Gaziantep Trabzon Kayseri Samsun Erzurum Kars Van Diyarbakır Malatya Dalaman Bodrum Sivas Elazığ Bursa Ankara Ağrı Erzincan Muş Batman Mardin Şanlıurfa Adana Konya Denizli KKTC THY THY PegasusOnur Air SUN Express ATLAS JET Tokat Zonguldak BoraJet Edremit Siirt Gazipaşa Çorlu KKTC Iğdır Gökçeada Hata y Adana Antalya İzmir Gaziantep Trabzon Kayseri Ankara Bursa Samsun Erzurum Kars Van Mardin Malatya Dalaman Bodrum Konya Sivas Elazığ Sinop Nevşehir Adıyaman Batman Çanakkale Denizli Eskişehir Isparta Kahramanmaraş Merzifon Muş Uşak Ağrı Tekirda ğ Erzincan Diyarbakır Şanlıurf a İstanbul Kastamonu Bingöl Şırnak 2013 6 Airline Comps 7 Hubs 52 Points 2003 2 Hubs 26 Points Turkey has the most rapid domestic flight expansion Domestic Flights 105
  106. 106. 2003 60 Points SunExpressPegasus ATLAS JET Onur Air 2013 236 Points THY THY SunExpress International Flights 294% Expansion 106
  107. 107. Improving Social Equity 107
  108. 108. Southeast Anatolian Project ₺36.1 bn invested in Southeast Anatolian Project during 2003-13 22 dams, almost completed 416 thousand, new jobs since 2009 $6.6bn contribution to the economy 108
  109. 109. East Anatolian Project (DAP) Source: Ministry of Development Division of GAP Administration 1.2 mn jobs created A $1.4bn contribution to the economy 109
  110. 110. Konya Plain Project (KOP) 14 irrigation 3 drinking water 1 energy 18 GREAT PROJECTS 110
  111. 111. Income Growth: Faster in Poorer Regions 111 Source: TURKSTAT, Istanbul West Marmara Aegean East Marmara West Anatolia Mediterrannean Central Anatolia West Black Sea East Black Sea North East Anatolia Central East Anatolia South East Anatolia -5 0 5 10 15 20 25 30 35 40 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 3,000 RealHouseholdIncomeGrowth(%,2006-2012) Real Household Income (TRY,2006)
  112. 112. More Inclusive Growth 112 RealHouseholdIncomeGrowth(%,2006-12) Household Income Deciles Source: TURKSTAT 32.3 26.4 20.9 19.4 18.5 17.0 15.6 12.3 11.6 10.5 5 10 15 20 25 30 35 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th
  113. 113. Middle Class*: Expanding in line with Rising GDP 113 Source: Azevedo and Atamanov (2014) * Middle class is every person with an income above US$10 in PPP per day.
  114. 114. Inclusive Growth: Better Public Services 114 Source: Turkstat (SatisfactionfromPublicServicesinGeneral,%) 40.2 48.7 39.5 69.6 69.7 74.7 0 10 20 30 40 50 60 70 80 2003 2013 Social Security Education Health
  115. 115. Inclusive Growth: Improving Living Standarts 115 38 10 20 77 5 0 5 10 15 20 25 30 35 40 1990 2000 2010 Infant mortality rate (per 1000, live births) Life expectancy at birth, total (years) (GapbetweenTurkeyandOECD)
  116. 116. Strong Long-Term Prospects 116
  117. 117. GDP per Capita Low-Income $1,035-or less Lower-Middle-Income $1,036-$4,085 Upper-Middle-Income $4,086-$12,615 117 High-Income $12,616 and up 2002 $ 3,492 2013 $ 10,782 2016 $ 12,670 Source: TURKSTAT, Medium-Term Program, WB
  118. 118. Priorities for Sustainable Growth Improving Competitiveness Innovation-based Growth Attracting FDI Financial deepening R&D Corporate Governance Building a more Equitable Society Inclusive Growth Education & Skills Childcare & Family Support Flexible Labor Market Improving Quality of Institutions Open-access Growth Rule of Law Independent and Arms- length Regulation Improving Business Climate Public Finance Management 118
  119. 119. Achieving Sustainable Development 10th Development Plan (2014-18) Qualified Individiuals, Stronger Society Innovative Production, Sustainable Growth Liveable Spaces, Sustainable Environment International Cooperation for Development 25 Transformation Programs of High Priority Implemention, Monitoring, and Evaluation 119
  120. 120. Determinants of Long-Term Growth Quality of Institutions Demographics Productivity 120
  121. 121. Improving Quality of Institutions Corruption Perceptions: 2013: 53rd in 177 2002: 65th in 102 Ease of Doing Business: 2013-14: 69th in 185 2006: 84th in 175 Global Competitiveness: 2013: 44th in 148 2005: 71st in 117 Source: WB, WEF, Transparency International 121
  122. 122. 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 122
  123. 123. Corruption Perceptions Index (2013) (53rd among 177 countries) Source: Transparency International 53 69 72 80 80 94 106 106 114 127 40 50 60 70 80 90 100 110 120 130 140 TURKEY Italy Brazil China Greece India Argentina Mexico Indonesia Russia 123
  124. 124. Within the period of 2005-2012, Turkey has ranked higher than Russia, Argentina and Greece.(71st among 117 countries) 31 35 36 38 43 45 47 48 53 54 57 59 67 68 69 71 30 35 40 45 50 55 60 65 70 75 Portekiz Hungary SlovakRep. Italy Poland India Greece China Russia Argentina Brazil Mexico Romania Ukraine Indonesia TURKEY Source: World Economic Forum Global Competitiveness Index (2005) 124
  125. 125. (44th among 148 countries) Source: World Economic Forum Global Competitiveness Index (2013) 29 38 42 44 49 51 55 56 60 63 64 76 78 84 91 104 25 35 45 55 65 75 85 95 105 China Indonesia Poland TURKEY Italy Portugal Mexico Brazil India Hungary Russia Romania SlovakRep. Ukraine Greece Argentina 125
  126. 126. (84th among 175 countries) Source: World Bank Ease of Doing Business (2006) 62 69 70 71 84 93 97 108 111 122 131 132 134 138 60 70 80 90 100 110 120 130 140 Mexico Italy Uruguay Romania TURKEY Argentina Russia China Greece Brazil Indonesia Ukraine Croatia India 126
  127. 127. (69th among 189 countries) Source: World Bank Ease of Doing Business (2013) 53 65 69 72 73 88 89 92 96 112 116 120 126 134 20 40 60 80 100 120 140 Mexico Italy TURKEY Greece Romania Uruguay Crotia Russia China Ukraine Brazil Indonesia Argentina India 127
  128. 128. Favorable Demographics Source: Eurostat Shareof15-24yearsoldinTotalPop.(%) 16.6 7 9 11 13 15 17 19 21 Spain Italy Andorra Slovenia Greece Portugal Bulgaria Germany Czech Republic Serbia Switzerland Ireland Croatia Estonia Latvia France Austria Hungary Luxembourg Finland Netherlands Ukraine Poland Denmark Sweden United Kingdom Slovakia Norway Malta Lithuania Montenegro Iceland Macedonia Georgia Moldova Turkey Azerbaijan 128
  129. 129. 1.7 0.7 0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 TURKEY OECD EU-28 AnnualAverageGrowthRate(%,2001-13) Working Age Population Growth Source: OECD, Eurostat, Turkstat 129
  130. 130. Thank You… 130

×