MEDIUM TERM PROGRAM (2015-2017) October 8 th , 2014 WORLD ECONOMY - - PowerPoint PPT Presentation

MEDIUM TERM PROGRAM

(2015-2017)

October 8th, 2014

WORLD ECONOMY

2

Source: IMF World Economic Outlook Report October 2014

4.9 5.6 5.7 3.0 0.0 5.4 4.1 3.4 3.3 3.3 3.8 1 2 3 4 5 6 7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2015 F

(%)

Global growth rate is below pre-crisis levels. 3

Global Growth

Contribution of the advanced economies to the global growth, which exhibited a slowdown aftermath of the global crisis, has been rising.

2.8 3.1 2.8 0.1

• 3.4

3.1 1.7 1.2 1.4 1.8 2.3

• 4
• 3
• 2
• 1

1 2 3 4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2015 F

(%)

Source: IMF World Economic Outlook Report October 2014

Advanced Economies Growth

4

The growth of emerging market and developing economies which acted as the locomotive for the world economy in post-crisis period, demonstrates a slowdown in recent years.

7.3 8.2 8.6 5.8 3.1 7.5 6.2 5.1 4.7 4.4 5.0 1 2 3 4 5 6 7 8 9 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2015 F

(%)

Source: IMF World Economic Outlook Report October 2014

Emerging Market and Developing Economies Growth

5

The growth of the world trade volume has been weaker than pre-crisis levels.

Source: IMF World Economic Outlook Report October 2014

6

7.6 9.2 8.1 3.0

• 10.6

12.6 6.7 2.9 3.0 3.8 5.0

• 12
• 9
• 6
• 3

3 6 9 12 15 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2015 F

(%)

The Growth of World Trade Volume

Source: BLS, Eurostat, IMF World Economic Outlook October 2014 1.7 0.3

• 3
• 2
• 1

1 2 3 4 5 6 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 7 2014-1 7

Inflation Rates

U.S. Euro Area

(%)

5.9 11.5 2 4 6 8 10 12 14 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 7 2014-1 7

Unemployment Rates

U.S. Euro Area

(%)

While U.S. Economy is recovering, Eurozone faces risk of deflation with weaker growth and higher unemployment rates.

7

3.3 2.7 1.8

• 0.3
• 2.8

2.5 1.6 2.3 2.2 2.2 3.1

• 3
• 2
• 1

1 2 3 4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2015 F

U.S. Growth

(%)

1.7 3.3 3.0 0.4

• 4.5

2.0 1.6

• 0.7 -0.4

0.8 1.3

• 5
• 4
• 3
• 2
• 1

1 2 3 4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2015 F

Euro Area Growth

(%)

U.S. and Euro Area Economic Outlook

Moderate recovery in U.S. economy is expected to continue in the next period.

 In line with the economic recovery, the Central Bank of the U.S. (FED) is expected to

finalize the asset purchase program by October 2014 meeting, after the tapering initiated in January 2014.

 Federal Reserve is expected to increase policy rate by mid 2015.

Measures are taken to revive demand in the Euro Area.

 European Central Bank (ECB) decided to continue quantitative easing to support

economic recovery and to eliminate deflation risk.

 Developments taking place in the Euro Area, the major trade partner of Turkey, effects

Turkish economy through the trade, investment and finance channels . 8

MEDIUM TERM PROGRAM

9

 Continuing to fight against inflation decisively,  Reducing current account deficit,  Increasing potential growth by accelerating structural reforms.

Medium Term Program Priorities

10

 In order to reduce current account deficit and support monetary

policy aiming to decrease inflation; fiscal policy will continue to maintain its tight stance.

 Structural reforms are going to be accelerated for the purpose of

strengthening macroeconomic stability and decreasing current account deficit to sustainable levels.

Medium Term Program Policies

11

MEDIUM TERM PROGRAM 2015-2017 MAIN MACROECONOMIC AGGREGATES

12

3.3 4.0 5.0 5.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 2014 F 2015 P 2016 P 2017 P

F: Forecast P: Program

GDP Growth (%)

13

5.7 5.4 5.4 5.2 4.5 4.8 5.1 5.4 5.7 6.0 2014 F 2015 P 2016 P 2017 P

Current Account Deficit / GDP (%)

14

F: Forecast P: Program

13.2 13.5 14.4 14.5 13.4 14.9 15.2 16.2 17.1 13 14 15 16 17 18 2009 2010 2011 2012 2013 2014 F 2015 P 2016 P 2017 P

15

Total Domestic Savings (% GDP)

F: Forecast P: Program

9.6 9.5 9.2 9.1 9.0 9.2 9.4 9.6 9.8 2014 F 2015 P 2016 P 2017 P

Unemployment Rate (%)

16

F: Forecast P: Program

9.4 6.3 5.0 5.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 2014 F 2015 P 2016 P 2017 P

Inflation Rate (%)

17

F: Forecast P: Program

0.4 1.2 1.5 1.8 0.0 0.5 1.0 1.5 2.0 2014 F 2015 P 2016 P 2017 P

Public Sector Primary Balance / GDP (%) (Program Defined)

18

F: Forecast P: Program

1.4 1.1 0.7 0.3 0.0 0.5 1.0 1.5 2014 F 2015 P 2016 P 2017 P

Central Government Budget Deficit / GDP (%)

19

F: Forecast P: Program

EU Defined Public Debt / GDP (%)

33.1 31.8 30.0 28.5 25 27 29 31 33 35 2014 F 2015 P 2016 P 2017 P

20

F: Forecast P: Program

 Medium Term Program (2015-2017) covers the period in which

structural reforms in Tenth Development Plan are going to be implemented.

 Tenth Development Plan targets stable and high growth rates by

providing the transformation of economy towards innovative production structure.

Structural Reform Agenda

21

HIGH AND STABLE GROWTH

A competitive, export oriented, and private sector- led production structure will be promoted via advances in productivity and industrialization.

Institutional Quality Physical Infrastructure Technology and Innovation Human Capital and Labor Market Macroeconomic Stability

Growth Strategy

22

1.

Productivity Growth in Production

2.

Reducing Dependence on Imports

3.

Increasing Domestic Savings at the National Level and Preventing Wastefulness

4.

Istanbul International Financial Center

5.

Rationalization of Public Expenditures

6.

Raising the Quality of Public Revenue

7.

Improving the Business and Investment Climate

8.

Improving the Effectiveness of the Labor Market

9.

Reducing the Informal Economy

• 10. Development of the Statistical Information

Infrastructure

• 11. Commercialization of Priority Technology Areas
• 12. Technology Development and Local Production

through Better Public Procurement

• 13. Energy Generation Based on Local Resources
• 14. Energy Efficiency Improvement
• 15. Effective Use of Water in Agriculture
• 16. Structural Transformation in Healthcare

Industries

• 17. Improvement in Health Tourism
• 18. Transition from Transportation to Logistics
• 19. Development of Basic and Occupational Skills
• 20. Attracting Qualified Human Resources from

Abroad

• 21. Healthy Life and Mobility
• 22. Preserving the Family and Dynamic Population

Structure

• 23. Institutional Capacity Development at the Local

Level

• 24. Urban Redevelopment Program to Increase

Competitiveness and Social Cohesion

• 25. Improving International Cooperation

Infrastructure for Development

Primary Transformation Programs in the Tenth Development Plan

23

TABLES

24

2013 2014 2015 2016 2017 GDP Growth (%) 4.1 3.3 4.0 5.0 5.0 GDP (Billion TL) 1,565 1,764 1,945 2,150 2,370 GDP per Capita ($) 10,807 10,537 10,936 11,541 12,229 CPI (end year, % change) 7.4 9.4 6.3 5.0 5.0

GDP and Inflation

25

2013 2014 2015 2016 2017 Export (Fob) 151.8 160.5 173.0 187.4 203.4 Import (Cif) 251.7 244.0 258.0 276.8 297.5 Foreign Trade Balance

• 99.9
• 83.5
• 85.0
• 89.4
• 94.1

Tourism Receipts 28.0 29.5 31.5 33.5 35.5 Current Account Balance

• 65.1
• 46.0
• 46.0
• 49.2
• 50.7

Current Account Balance (% GDP)

• 7.9
• 5.7
• 5.4
• 5.4
• 5.2

($ billion)

26

Balance of Payments

2013 2014 2015 2016 2017 Employment (thousand) 24,601 25,824 26,340 27,002 27,599 Non-Farm Employment (thousand) 19,397 20,335 20,958 21,741 22,493 Employment Rate (%) 43.9 45.3 45.4 45.7 45.9 Labor Force Participation Rate (%) 48.3 50.1 50.2 50.3 50.5 Unemployment Rate (%) 9.0 9.6 9.5 9.2 9.1

27

Labor Market

2013 2014 2015 2016 2017

Total Expenditures 408.2 448.4 472.9 507.6 542.3 Primary Expenditures 358.2 398.2 418.9 453.6 487.3 Interest Payments 50.0 50.2 54.0 54.0 55.0 Total Revenues 389.7 424.0 452.0 491.0 534.2 Tax Revenues 326.2 351.6 389.5 427.9 468.5 Non-Tax Revenues 63.5 72.4 62.5 63.2 65.7 Budget Balance

• 18.5
• 24.4
• 21.0
• 16.5
• 8.0

(billion TL)

28

Central Government Budget

2013 2014 2015 2016 2017 Public Sector Balance

• 0.5
• 1.0
• 0.5
• 0.2

0.1 Central Government Budget

• 1.2
• 1.4
• 1.1
• 0.8
• 0.3

Rest of the Public Sector 0.7 0.4 0.6 0.6 0.4 Public Sector Primary Balance(*) 1.1 0.4 1.2 1.5 1.8 Central Government Budget 0.9 0.5 1.1 1.3 1.6 Rest of the Public Sector 0.2

• 0.1

0.1 0.2 0.1

(% of GDP)

(*) Program Defined

29

Public Finance