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Istanbul Finance Summit

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Istanbul Finance Summit

  1. 1. Mehmet Şimşek Minister of Finance Outlook for Turkey September 16, 2014
  2. 2. Outline Political & Economic Outlook Financial Markets: Priorities & Reform Areas Long-Term Prospects 2
  3. 3. Political Outlook 3
  4. 4. Political Outlook Local Elections Presidential Elections Parliamentary Elections 4
  5. 5. ( %) 38.8 50 45 40 35 30 25 20 15 10 5 Source: Anadolu Agency AK PARTY: Justice and Development Party CHP: Republican People’s Party MHP: NationalistMovement Party BDP: Peace and Democracy Party 23.1 16.1 5.7 16.3 45.5 27.8 15.2 4.2 7.3 0 AK PARTY CHP MHP BDP Others 2009 2014 5 Local Election Results
  6. 6. 6 Presidential Election Results 9.8 51.8 38.4 RECEP TAYYİP ERDOĞAN EKMELEDDİN İHSANOĞLU SELAHATTİN DEMİRTAŞ Source: Supreme Electoral Council
  7. 7. ( %) Which party would you vote for if the AK PARTY CHP MHP HDP Source: ORC, August 2014 AK PARTY: Justice and Development Party CHP: Republican People’s Party MHP: NationalistMovement Party HDP: People’ s Democratic Party 7 3.5 14.2 10.2 25 47.1 0 5 10 15 20 25 30 35 40 45 50 Others elections were held today?
  8. 8. Political Outlook Time to Deepen & Broaden Reform Agenda Preparation Phase 2014- 2015 No Elections Four Years Implementation Phase 2015 - 2019 8
  9. 9. 9 Vision 2023 Political Stability Structural Reforms 2023 Targets
  10. 10. Macroeconomic Outlook 10
  11. 11. Macroeconomic Outlook Growth has Moderated Inflation appears to have Peaked Fiscal Position Remains Strong External Balance is Improving 11
  12. 12. Growth has Moderated 12
  13. 13. Turkey: A Real Convergence Story Source: Turkstat, Eurostat *Poland, Hungary, Bulgaria, Croatia, Lithuania, Latvia 13 121.2 Real GDP (Q4-07=100, s.a.) 110 110.8 98.1 100 100.0 106.6 85 90 95 105 115 120 125 2008-Q1 Q2 Q3 Q4 2009-Q1 Q2 Q3 Q4 2010-Q1 Q2 Q3 Q4 2011-Q1 Q2 Q3 Q4 2012-Q1 Q2 Q3 Q4 2013-Q1 Q2 Q3 Q4 2014-Q1 Q2 Turkey Emerging Europe* Euro Area USA
  14. 14. Edging up towards High Income Group 12,615 4,085 3,492 10,807 12,670 1,035 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 High Income ( $ 12,616- and up) Higher - Middle Income ( $ 4,086-12,615) Lower - Middle Income ( $ 1,036-4,085) Low Income ( $ 1,035-or less) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 GDP per capita Source: Turkstat, MTP, WB 14
  15. 15. Outlook for Growth Remains Positive 15 4.1 5.5 5.0 4.5 4.0 3.5 Kaynak: IMF, TURKSTAT, MTP 2014-16 4.0 5.0 5.0 3.4 3.7 4.4 4.6 3.0 2013 2014 2015 2016 Turkey EM's Excluding China (%)
  16. 16. A more Balanced Growth 20 15 10 5 0 -5 -10 2010-Q1 Q2 Q3 Q4 2011-Q1 Q2 Q3 Q4 Final Domestic Demand Net Exports Change in Stocks GDP Growth 2012-Q1 Q2 Q3 Q4 2013-Q1 Q2 Q3 Q4 2014-Q1 Q2 Source: Turkstat 16
  17. 17. Source: Turkstat, CBRT 17 Manufacturing appears to be Loosing Momentum 55 -25 -20 -15 -10 -5 70 0 5 10 15 20 85 25 60 65 75 80 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 Jul-14 Capacitiy Utilization Rate Industrial Production (3-month m.a., change y/y) (rhs)
  18. 18. Some Softening in Confidence Indices 18 100 100 55 55 65 60 75 65 70 75 110 80 120 85 60 70 80 85 90 95 105 115 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 Jul-14 Real Sector Confidence Index (s.a.) Consumer Confidence Index (rhs) Source: Turkstat, CBRT
  19. 19. Risks to Growth Upside • Improving domestic financial conditions Downside • Geopolitical tensions • Slower European recovery 19
  20. 20. Job Creation Employment since 2007 (mn people s.a.) Source:TURKSTAT 20 25.9 19 20 21 22 23 24 25 26 27 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14
  21. 21. Employment Growth 21 5.6 -6 -4 -2 0 2 4 6 TURKEY Brazil Germany Russia Poland Hungary Belgium Chezch Rebuplic France Slovakia Slovenia USA Denmark Ireland Portugal Japan Greece Italy Spain Euro Area Billion People (s.a.) Source: Eurostat, OECD, Turkstat
  22. 22. Unemployment & Labor Participation Rates Source: TURKSTAT 22 8 44 9 45 10 46 11 47 12 48 13 49 14 50 15 51 16 52 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 Unemployment Rate Labor Force Participation Rate (rhs) (s.a., %)
  23. 23. Inflation appears to have Peaked 23
  24. 24. 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 (CPI, Annual, %) 24 Source: TURKSTAT
  25. 25. CBRT’s Inflation Outlook Source: CBRT, Inflation Report July-14 25
  26. 26. Factors behind High Inflation in 2014 Drought Geopolitics (Iraq, Syria, Russia) Exchange Rate Weakness Deterioration in Expectations 26
  27. 27. 27 Worst Drought over the Last 13 Years Drought Analysis (1972-2014 )* Source: Turkish State Meteorological Service * Indicates deviation from the last 12-month-mean in June. (12-month) HUMID NORMAL DRY Unusually humid Extremely humid Very humid Fairly humid Slightly humid Normal Slightly dry Fairly dry Very dry Extremely dry Unusually dry
  28. 28. Food Prices: Main Driver of Inflation 28 (Jan-12=100) 120 120.5 125 123.1 90 95 100 105 110 115 Jan-12 Feb-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 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 CPI Food Index
  29. 29. Food & Non-Food Prices 29 14.4 8 7.8 2 4 6 10 12 14 16 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Food Non-Food Source: TURKSTAT, CBRT (CPI, Annual, %)
  30. 30. Food & Beverage in the Consumption Basket 30 (Weıght in CPI (%) 24.5 26 24 22 20 18 16 14 12 10 8 TURKEY Poland Portugal Greece Hungary Spain Mexico Chezch Rep. Italy France Ireland Source: OECD
  31. 31. Factors Distorting Food Prices Structural • Intermediation chain • Low productivity • Limited storage capacity Cyclical • Drought • Rising soft commodity prices • Geopolitical tensions 31
  32. 32. Delayed Impact of Exchange Rate Weakness Source: Bloomberg EM Average: Czech R., Hungary, Poland, S.Africa, Indonesia, S.Korea, Brazil, Chile, Colombia, Mexico 90 100 110 120 130 140 150 160 170 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Turkey EM Avarage Exchange Rate relative to USD (01.11.2010=100) Import Prices in USD Import Prices in TL Import Price Index (2010= 100) Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 May-14
  33. 33. Deterioration in Inflation Expectations 33 7.4 7 6.8 4 5 6 8 9 10 Apr-06 Agu-06 Jan-07 May-07 Oct-07 Feb-08 Jul-08 Nov-08 Apr-09 Aug-09 Jan-10 May-10 Oct-10 Feb-11 Jul-11 Nov-11 Apr-12 Aug-12 Jan-13 Oct-13 Jul-14 12 Months 24 Months Inflation Expectations (%) Source: CBRT
  34. 34. 34 Geopolitical Tensions & Inflation Outlook Exchange rate depreciation around 10% 1.5ppts increase in inflation $10 increase in energy prices 0.4ppt increase in inflation 1 million refugees Pressure on Food & Rental Prices Source: Kara, Hakan and Öğünç F. (2011). "Effect of Exchange Rate and Import Prices on Inflation", CBRT, Economic Notes, No. 2011/14., UNHRC
  35. 35. Inflation Outlook Upside • TL Depreciation • Unprocessed food prices Downside • Output Gap • Macroprudential Measures • Moderate Credit Growth 35
  36. 36. Fiscal Position Remains Strong 36
  37. 37. Sustaining a Solid Fiscal Position 10.8 7.9 4.1 Maastricht Criteria: 3% 0.1 -1.3 0.2 1.6 5.5 3.0 0.4 1.0 1.0 1.1 0.8 0.5 12.0 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Satisfied Maastricht Criteria except 2009 Source: Ministry of Development 37 Budget Deficit (%, GDP) Medium-Term Program (2014-16)
  38. 38. Budget Deficit (2014) Budget Deficit (%, GDP) 4.0 4.5 4 3.5 3 2.5 2 1.5 1 Source: IMF, OECD, Ministry of Development 2.9 2.3 1.1 0.5 OECD EU-28 EMs Turkey 38
  39. 39. Source: IMF Fiscal Strength in EMs Gross Public Debt (%, 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 140 120 100 80 60 40 20 0 0 1 2 3 4 5 6 7 8 9 39
  40. 40. 74.0 67.7 Lower Public Debt 59.6 52.7 46.5 39.9 Maastricht Criteria: 60% 40.0 46.1 42.3 39.1 Medium-Term Program 36.2 36.2 33.0 31.0 30.0 75 70 65 60 55 50 45 40 35 30 25 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Debt-to-GDP, % Satisfying Maastricht Criteria since 2004 Source: Treasury 40 (2014-16)
  41. 41. Public Debt (2014) Debt-to-GDP, % 111.8 120 110 100 90 80 70 60 50 40 30 Source: IMF, OECD, Treasury 89.0 33.3 33.0 20 OECD EU EMs Turkey 41
  42. 42. Fiscal Outlook Upside • Conservative revenue assumptions • Outperformance in non-tax revenues • Improving tax compliance 42 Downside •Weaker domestic demand • Higher VAT rebates
  43. 43. External Balance is Improving 43
  44. 44. Exports are growing faster than Imports 44 (6- month-moving average, y/y, %) Source: TURKSTAT
  45. 45. C/A Deficit is Narrowing Source: CBRT 45 (%, GDP) -10 -8 -6 -4 -2 0 2 2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014-Q2 C/A Deficit C/A Deficit excl Energy C/A Deficit excl Energy & Gold
  46. 46. Financing of C/A Deficit is Improving Source: CBRT 46 (12 Month Rolling, USD bn) -10 0 10 20 30 40 50 60 70 80 90 Jan 10 Mar 10 May 10 Jul 10 Sept 10 Nov 10 Jan 11 Mar 11 May 11 Jul 11 Sept 11 Nov 11 Jan 12 Mar 12 May 12 Jul 12 Sept 12 Nov 12 Jan 13 Mar 13 May 13 Jul 13 Sept 13 Nov 13 Jan 14 Mar 14 May 14 Jul 14 FDI Inflows and Long-Term Portfolio and Short-Term Current Account Deficit
  47. 47. Outlook for C/A Deficit Upside • Geopolitical tensions • Sluggish European Recovery Downside • Softer domestic demand • Lower energy prices 47
  48. 48. Impact of Geopolitical Tensions Direct Impact • Trade Balance Russia -$18.1bn Syria $0.9bn Libya $2.4bn Iraq $11.8bn Iran -$6.2bn 10% decline in Turkey’s exports to Iraq 0.2 ppt rise in Turkey’s CAD-to-GDP 48 Saudi Arabia $1.2bn
  49. 49. 49 Geopolitical Tensions & C/A Deficit Indirect Impact $10 increase in Brent oil prices A $5bn- (0.6% of GDP) increase in Turkey’s C/A deficit
  50. 50. Geopolitical Tensions: External Demand 50 (Export, 2008=100) Source: TURKSTAT 0 50 100 150 200 250 300 350 400 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 Jul-14 Egypt Iraq Libya
  51. 51. Strong Linkage between Exports to EU & European Growth 51 (YoY, %) 35 30 25 20 15 10 5 0 -5 -10 Source: TURKSTAT, Eurostat 3 2.5 2 1.5 1 0.5 0 -0.5 -1 -15 2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014-Q2 Exports to EU EU Growth (rhs) (%)
  52. 52. Share of EU in Turkey’s Exports 52 Exports (%) FDI (%) Source: TURKSTAT, CBRT 2013 56.6 43.4 EU Others 74.8 25.2 EU Others
  53. 53. Turkey's FX Position Billion $ Assets Liabilities Net Position Public Sector* 138,3 122,5 15,8 Banking Sector** 490,2 489,6 0,6 Real Sector*** 101,2 271,2 -170,0 Short Term 83,9 94,1 -10,2 Household**** 191,0 0,5 190,5 FX Deposit ***** 83,8 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 11 Sept., 2014; data from gross external debt stock as of Q1-14 ** Data – Jul. 2014 *** Data – May.2014 **** Data - Mar. 2013 *****Data-05.09.2014 53
  54. 54. Reserves are back at 2013 levels 54 (USD bn) Source: CBRT 134.1 80 90 100 110 120 130 140 150 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14
  55. 55. Turkey’s Banks: among the Strongest in EMs Source: World Bank 55
  56. 56. Corporate FX Exposure is Moderate Source: CBRT No FX Loans 63% FX Loan w/o export earning FX Loan w/ export earning 25% 12% 9,500 firms Total net sales at 71% of GDP 56
  57. 57. Low Household Leverage (Household Liabilities, % of GDP, March 2014) Lithuania TURKEY Latvia Hungary Slovenia Slovakia Czech Republic Poland Estonia Italy Austria Belgium Germany Luxembourg France Malta Euro Area Greece Spain Sweden Portugal United Kingdom Source: CBRT, ECB 57 No FX exposure 63.9 23.0 0 20 40 60 80 100 120 140 Denmark
  58. 58. Risk Perception Remains High Source: Bloomberg EM Average: Czech R., Hungary, Poland, S.Africa, Indonesia, S.Korea, Brazil, Chile, Colombia, Mexico 58 50 100 150 200 250 300 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Turkey EM Average (5-y CDS, pt)
  59. 59. 0 10 20 30 40 50 60 70 80 Jan-06 Apr-06 Jul-06 Oct-06 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 Jul-14 Exchange Rate Volatility 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. 59 Volatility (%) * Emerging Economies** Turkey Exchange Rate Volatility also Remains High
  60. 60. Capital Inflows to EMs Source: EFPR 60 Weekly fund flows (Billion USD) -8 -4 0 4 8 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Bonds Equities
  61. 61. Capital Flows to Turkey 61 -15 -10 -5 0 5 10 15 20 25 30 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 Jul-14 Equity Government Securities (TL Bonds) (52- week cumulative (Billion USD) Source: CBRT
  62. 62. Financial Markets: Priorities & Reform Areas 62
  63. 63. Turkish Financial Sector Share of Banks in Financial Sector 87.4% Insurance Companies and Pension Mutual Fund 4.7% Other Financial Institutions 8.0% Source: Central Bank of Republic of Turkey 63
  64. 64. Financial Markets Source: TBU 162 106 98 210 82 69 230 210 190 170 150 130 110 90 70 50 Global EMs Turkey Bank Assets Capital Markets (nominal value, % GDP, 2012)
  65. 65. Investment Funds 65 Net Asset Value , % GDP, 2012 Source: CMB 2 14 16 14 12 10 8 6 4 2 0 Turkey Average of Emerging Economies
  66. 66. Market Capitalization 66 15 24 50 45 40 35 30 25 20 15 Source: CMB Emerging Economies: Chile, Tayland, Colombia, India, Brazil, China, Indonesia, Mexica, Russia, Turkey, Sri Lanka, Hungary, Arjantina 46 10 Turkey 2002 Turkey 2013 Average of Emerging Economies 2013 (%, GDP)
  67. 67. Free-Float 28 Most Turkish companies are privately owned 80 70 60 50 40 30 20 Source: Capital Markets Board, Central Securities Depository 70 10 Turkey EM Average (%) 67
  68. 68. Deepening Capital Markets 68 A New Capital Markets Law Restructuring of Borsa Istanbul Istanbul Finance Center Incentives for • Business Angels • Venture Capital • Private Pensions
  69. 69. A New Capital Markets Law New legal framework in line with the best global practices •Increasing financial deepening & innovation •Strengthening investor rights •Improving corporate governance 69
  70. 70. Restructuring of Borsa Istanbul Regional Leadership Raising Market Cap/GDP to 80% 1,000 new companies to be listed 70
  71. 71. Project Targets 71 Istanbul Top 25 cities in the Global Finance Centers Index Source: 10th Development Plan Turkey Top 30 countries in the Financial Development Index
  72. 72. Global Financial Centers Index 2009 72nd 2014 47th 2018 25th 45 47 80 70 60 50 40 30 Source: Global Financial Centres Index 15 60 63 70 75 77 20 Rio de Jeneiro ISTANBUL Warsaw Mauritius Mexico Prague Budapest (2014) 72
  73. 73. Financial Development Index (2012) 45 43 41 39 37 35 33 31 29 27 2009: 44th (55 countries) Source: The Financial Development Report 73 32 35 2012: 42nd (62 countries) 37 42 2018: 30th 43 44 25 Brezilya Czech Republic Poland Turkey Mexico Hungary
  74. 74. Goals of the Project Strengthening the legal framework Increasing the variety of financial products & services Establishing an organizational structure Developing human resources Developing the regulatory & supervisory framework Establishing a simple & efficient taxation system Improving the physical infrastructure 74
  75. 75. Istanbul as a Financial Center Financial sector currently employs 200 thousand people Istanbul Finance Center is likely to add 150 thousand 75
  76. 76. Istanbul as a Financial Center Will be built on 2.5 million m2 of area 560 thousand m2 for offices 90 thousand m2for shopping centers 70 thousand m2for hotels 60 thousand m2 for residences Congress center with a capacity for 2 thousand people 810 thousand m2 construction site 76
  77. 77. Support for Start-Ups Incentives for VCs Incentives for Biz Angels 77
  78. 78. Increasing Savings: Private Pensions 25% State Contribution 1.6 million new participants and TL10.1bn funds since end-2012 78
  79. 79. Sukuk Similar to eurobonds, internt’l holders are not s.t. w/holding tax 79 Sep-12: Sukuk issued for $1.5bn in international market Oct-12: Sukuk denominated in TL issued for TL1.6bn Feb-13: Sukuk issued for TL1.5bn Aug-13: Sukuk issued for TL1.8bn Oct-13: Sukuk issued for $1.3bn Feb-14: Sukuk issued for TL1.3bn
  80. 80. Turkey’s Macro Fundamentals & Long-Term Prospects 80
  81. 81. 81 Rapidly Growing Economy 3.0 5.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 1993-2002 2003-13 Real GDP (%) Kaynak: TURKSTAT
  82. 82. Real Convergence with the EU Income Per Capita (PPP, % ) 60 50 40 30 20 Source: IMF, OECD, TURKSTAT 82 22.7 35.3 37.0 58.3 10 2002 2013 Turkey /USA Turkey /European Union
  83. 83. Determinants of Long-Term Growth Quality of Institutions Demographics Productivity 83
  84. 84. 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 84
  85. 85. Corruption Perceptions Index (2002) (65th among 102 countries) 31 44 45 58 59 65 70 73 74 96 100 90 80 70 60 50 40 30 20 Italy Greece Brazil Mexico China TURKEY Argentina India Russia Indonesia Source: Transparency International 85
  86. 86. Corruption Perceptions Index (2013) (53rd among 177 countries) 53 69 140 130 120 110 100 90 80 70 60 50 Source: Transparency International 72 80 80 94 106 106 114 127 40 TURKEY Italy Brazil China Greece India Argentina Mexico Indonesia Russia 86
  87. 87. Global Competitiveness Index (2005) Within the period of 2005-2012, Turkey has ranked (71 higher than Russia, Argentina and Greece. st among 117 countries) 31 35 36 38 43 45 47 48 53 54 57 59 67 68 69 71 75 70 65 60 55 50 45 40 35 30 Portekiz Hungary Slovak Rep. Italy Poland India Greece China Russia Argentina Brazil Mexico Romania Ukraine Indonesia TURKEY Source: World Economic Forum 87
  88. 88. Global Competitiveness Index (2014) (45th among 144 countries) 28 34 36 105 95 85 75 65 55 45 35 Source: World Economic Forum 43 45 49 53 57 59 60 61 71 75 76 81 104 25 China Indonesia Portugal Poland TURKEY Italy Russia Brazil Romania Hungary Mexico India Slovak Rep. Ukraine Greece Argentina 88
  89. 89. Ease of Doing Business (2006) (84th among 175 countries) 62 69 70 140 130 120 110 100 90 80 70 Source: World Bank 71 84 93 97 108 111 122 131 132 134 138 60 Mexico Italy Uruguay Romania TURKEY Argentina Russia China Greece Brazil Indonesia Ukraine Croatia India 89
  90. 90. Ease of Doing Business (2013) (69th among 189 countries) 53 65 140 120 100 80 60 40 Source: World Bank 69 72 73 88 89 92 96 112 116 120 126 134 20 Mexico Italy TURKEY Greece Romania Uruguay Crotia Russia China Ukraine Brazil Indonesia Argentina India 90
  91. 91. Favorable Demographics Share of 15-24 years old in Total Pop. (%) Azerbaijan Turkey Moldova Georgia Macedonia Iceland Montenegro Lithuania Malta Norway Slovakia United Kingdom Sweden Denmark Poland Ukraine Netherlands Finland Luxembourg Hungary Austria France Latvia Estonia Croatia Ireland Switzerland Serbia Czech Republic Germany Bulgaria Portugal Greece Slovenia Andorra Italy Source: Eurostat 16.7 7 9 11 13 15 17 19 21 Spain 91
  92. 92. 1.7 0.7 0.2 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 TURKEY OECD EU-28 Annual Average Growth Rate (%, 2001-13) Working Age Population Growth Source: OECD, Eurostat, Turkstat 92
  93. 93. Priorities & Reform Agenda to Boost Productivity Sustaining a solid Macroeconomic Environment Improving Quality of Institutions Enhancing Human Capital Stock Improving Infrastructure Increasing Access & Quality of Health Services Improving Market Efficiency Increasing Labor Market Flexibility Deepening Capital Markets Investing in Local & Renewable Energy Technological Readiness & Innovation Combatting Shadow Economy Narrowing Regional Development Gaps 93
  94. 94. GDP 2002 Source: TURKSTAT, Medium-Term Program,PwC 2050 2002 $ 230 billion 2050 $ 5 trillion 2013 $ 822 billion 2023 $ 2 trillion 94
  95. 95. Global Investors in Turkey 95
  96. 96. International Companies Operating in Turkey Source: Ministry of Economy 96
  97. 97. Foreign Direct Investment Inflows (Billion dollar) 150 125 100 75 50 25 Source: CBRT 97 14.8 144.4 0 1980-2002 2003-2014 July
  98. 98. THANK YOU… 98

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