Turkish Economy: Recent Developments February 2011 -16 -12 12 - - PowerPoint PPT Presentation

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Turkish Economy: Recent Developments February 2011 -16 -12 12 - - PowerPoint PPT Presentation

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Republic of Turkey Undersecretariat of Treasury Turkish Economy: Recent Developments February 2011 -16 -12 12 -8 -4 0 4 8 GDP Growth Rates (%, YoY) Source: TURKSTAT 01 Q1 01 Q3 02 Q1 02 Q3 03 Q1 03 Q3 04 Q1 04 Q3 05 Q1 05 Q3

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SLIDE 1

February 2011

Turkish Economy: Recent Developments

Republic of Turkey Undersecretariat of Treasury

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SLIDE 2

GDP Growth Rates (%, YoY)

  • 16
  • 12
  • 8
  • 4

4 8 12

01 Q1 01 Q3 02 Q1 02 Q3 03 Q1 03 Q3 04 Q1 04 Q3 05 Q1 05 Q3 06 Q1 06 Q3 07 Q1 07 Q3 08 Q1 08 Q3 09 Q1 09 Q3 10 Q1 10 Q3

Source: TURKSTAT 2

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SLIDE 3

Contribution to GDP Growth (%)

  • 24
  • 20
  • 16
  • 12
  • 8
  • 4

4 8 12 16 20 2002 I III 2003 I III 2004 I III 2005 I III 2006 I III 2007 I III 2008 I III 2009 I III 2010 I III Private Cons. Private Inv.

  • Gov. Cons. and Inv.

Net Export Stock Building GDP Growth Source: TURKSTAT 3

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SLIDE 4

Source: TURKSTAT

Industrial Production Index (Seas. Adj.)

123.9 120.5 90 100 110 120 130 I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV 2005 2006 2007 2008 2009 2010

Percentage Change

4

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SLIDE 5

Real Sector Confidence Index

Source: CBRT

40 60 80 100 120 140

2007-1 3 5 7 9 11 2008-1 3 5 7 9 11 2009-1 3 5 7 9 11 2010-1 3 5 7 9 11 2011-1

5

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SLIDE 6

Consumer Confidence Index

Source: TURKSTAT-CBRT

60 70 80 90 100

2008-1 2 3 4 5 6 7 8 9 10 11 12 2009-1 2 3 4 5 6 7 8 9 10 11 12 2010-1 2 3 4 5 6 7 8 9 10 11 12 6

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SLIDE 7

GDP Growth Projections for 2010

6.0 6.5 7.0 7.5 8.0 8.5

MTP Merrill Lynch HSBC Unicorn Commerzbank RBS UniCredit JP Morgan CBRT- Expt Surv Morgan Stanley EC Dz Bank Citibank Global Insight IMF Credit Suisse BNP Paribas UBS World Bank Barclays OECD Goldman Sachs ING Bank

7

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SLIDE 8

GDP Growth Projections for 2011

3.0 3.5 4.0 4.5 5.0 5.5

HSBC World Bank RBS UniCredit ING Bank JP Morgan MTP IMF Citibank Merrill Lynch Global Insight Barclays UBS Morgan Stanley Dz Bank Credit Suisse CBRT- Expt Surv BNP Paribas Commerzbank Unicorn OECD EC Goldman Sachs

8

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SLIDE 9

GDP Growth: Medium Term Program Targets (Annual % Change)

4.5 5.0 5.5

2 3 4 5 6

2011 2012 2013

9

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SLIDE 10

3.9 4.2 4.8 5.0 4.4 3.6 2.9 3.2 2.7 1.8 0.5

  • 0.5 -1.0 -1.7 -2.1 -2.9 -2.6 -2.5 -2.2 -2.0 -2.1-1.8
  • 3
  • 2
  • 1

1 2 3 4 5 6 7

2009-1 2 3 4 5 6 7 8 9 10 11 12 2010-1 2 3 4 5 6 7 8 9 10

Annual Change in Unemployment Rate (Percentage Points)

Increase in Unemployment Decrease in Unemployment

10

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SLIDE 11

Unemployment Rate (%)

11.2 14.0 10.3 10.5 10.8 10.6 10.2 10.3 11.0

8 9 10 11 12 13 14 15 16 2002 2003 2004 2005 2006 2007 2008 2009 2010 October

Source: TURKSTAT Note: 2010 October unemployment figure is seasonally adjusted 11

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SLIDE 12

CPI and Core Index (Annual % Change)

Source: CBRT

4.9 3.2

2 4 6 8 10 12 14 2007-1 3 5 7 9 11 2008-1 3 5 7 9 11 2009-1 3 5 7 9 11 2010-1 3 5 7 9 11 2011-1 CPI Index I

12

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SLIDE 13

Current Account Deficit (Annualized, Billion USD)

Source: CBRT

48.6 10.1

  • 25
  • 20
  • 15
  • 10
  • 5

5 10 15 20 25 30 35 40 45 50 55

2007-1 3 5 7 9 11 2008-1 3 5 7 9 11 2009-1 3 5 7 9 11 2010-1 3 5 7 9 11

Current Account Deficit Current Account Deficit Excluding Energy

13

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SLIDE 14

Financing of Current Account Deficit (Billion USD)

Source: CBRT

2006 2007 2008 2009 2010 CURRENT ACCOUNT BALANCE

  • 32.2
  • 38.4
  • 42.0
  • 14.0
  • 48.6

CAPITAL AND FINANCIAL ACCOUNT (excl. Reserves) 38.2 44.7 36.2 9.0 57.0 Direct Investment (net) 19.3 19.9 17.0 6.9 7.1 Portfolio Investment and Deposits 17.3 0.9 2.4 7.9 34.0 Equity 1.9 5.1 0.7 2.8 3.5 Debt Securities 9.5

  • 2.4
  • 4.5

0.1 16.1 Foreign Banks' Deposits 5.9

  • 1.9

6.2 5.0 14.4 Public Sector (net)

  • 1.9
  • 3.0

4.0 2.7 5.4 Banks (net)

  • 4.5

2.1

  • 5.8

1.6 26.6 Non-Bank Private Sector (net) 18.8 26.0 23.3

  • 10.4
  • 6.2

Trade Credits (net)

  • 1.7

2.7 3.3

  • 2.5

0.8 Other

  • 9.1
  • 4.0
  • 8.0

2.8

  • 10.7

Reserve Assets

  • 6.1
  • 8.0

1.1

  • 0.1
  • 12.8

NET ERRORS AND OMISSIONS 0.2 1.8 4.7 5.1 4.3

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SLIDE 15

Central Bank’s Gross FX Reserves (Billion USD)

(*) As of February 4 2011 Source: CBRT

15 25 35 45 55 65 75 85 J 02 M S J 03 M S J 04 M S J 05 M S J 06 M S J 07 M S J 08 M S J 09 M S J 10 M S J 11 $82.6 billion*

15

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SLIDE 16

2010 Fiscal Developments

Central Government Budget Deficit / GDP (%)

4.0 4.9 ~3.6 2.5 3.0 3.5 4.0 4.5 5.0 Target Revised est. Outturn

IMF Defined Public Sector Primary Balance/GDP (%)

  • 0.34
  • 0.17
  • 0.4
  • 0.3
  • 0.2
  • 0.1

0.1 0.2 Target Revised est. Outturn

expected to be around near balance or a slight surplus

EU Defined General Gov't Gross Debt Stock / GDP (%)

42.3 ~41.5 49.0 36 38 40 42 44 46 48 50 Target Revised est. Outturn

Domestic Debt Rollover Ratio

99,5 89,3

84 86 88 90 92 94 96 98 100 102 Target Outturn

16

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SLIDE 17

Central Government Budget Deficit: Medium Term Program Targets (% of GDP)

Source: Medium Term Program 2.8 2.4 1.6 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2011 2012 2013 17

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SLIDE 18

Public Sector Primary Balance: Medium Term Program Targets (IMF Defined, % of GDP)

Source: Medium Term Program 0.3 0.7 1.0 0.0 0.2 0.4 0.6 0.8 1.0 1.2 2011 2012 2013 18

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SLIDE 19

67.4 59.2 52.3 39.5 45.5 42.3 40.6 38.8 36.8 73.7 39.4 46.1

30 40 50 60 70 80 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011P 2012P 2013P

General Government Debt (EU Defined, % of GDP)

Source: Treasury, Medium Term Program 19

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SLIDE 20

20

Treasury Financing Program (billion TL)

2009 2010 2011 Program I- TOTAL DEBT SERVICE 148.9 194.8 152.8 Domestic Debt Service 134.2 178.1 135.0 External Debt Service 14.6 16.7 17.8 II- FINANCING 148.9 194.8 152.8 TOTAL BORROWİNG 150.2 173.9 131.7 Domestic Borrowing 138.9 159.0 119.1 External Borrowing 11.3 14.9 12.5 NON-DEBT CREATING FINANCING SOURCES*

  • 1.3

20.9 21.1 Domestic Debt Rollover Ratio (%) 103.5 89.3 88.0

(*) The cash primary balance; proceeds from privatization, unemployment insurance fund and saving deposit insurance fund; receipts from on lending and guaranteed debt; and change in cash balance Source: Treasury

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SLIDE 21

58.9 46.3 41.5 37.6 37.2 31.3 33.8 29.1 26.6 41.1 53.7 58.5 62.4 62.8 68.7 66.2 70.9 73.4 25 50 75 100 2002 2003 2004 2005 2006 2007 2008 2009 2010 Foreign Exchange TL

Composition of Central Government Gross Debt (%)

Source: Treasury 21

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SLIDE 22

TL Floating TL Fixed TL Floating TL Fixed

Composition of TL Denominated Domestic Debt (%)

2002 2010 %51 %49 %37

Source: Treasury

%63

22

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SLIDE 23

Average Maturity of Borrowing

Domestic Borrowing (months) Eurobond Issuance (years)

(*) As of January Source: Treasury 9 12 15 32 35 44 59 34 28 28 10 20 30 40 50 60 70 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*

8.2 9.5 10.1 12.2 9.9 17.6 16.5 22.4 14.2 14.8 9.1 20.6 30.0 5.0 6.6 8.6 7.0

5 10 15 20 25 30

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*

Euro USD

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SLIDE 24

Banking Sector: Capital Adequacy Ratio (%)

Source: BRSA

25.1 30.9 28.2 23.7 21.9 18.9 18.0 20.6 18.9 5 10 15 20 25 30 35

2002 2003 2004 2005 2006 2007 2008 2009 2010

24

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SLIDE 25

Banking Sector: Capital Adequacy Ratio in Selected Emerging Markets (%, 2009)

Source: IMF, BRSA

20,9 20,6 19,8 18,8 17,6 17,6 15,9 15,8 15,4 15,1 14,7 14,4 14,3 14,0 13,3 12,9 12,1 11,4 23,9 5 10 15 20 25

Malta Russia Turkey Belarus Brazil Indonesia India Mexico Thailand Malaysia Egypt Romania Korea Chile Czech Rp. Poland Hungary Colombia China

25

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SLIDE 26

Banking Sector Asset Quality (NPL Ratio, %)

Source: BRSA

21.2 11.5 6.0 4.7 3.7 3.5 3.7 5.3 3.7 0.6 0.9 7.6 1.5 0.8 0.8 0.5 0.4 0.6 4 8 12 16 20 24 2002 2003 2004 2005 2006 2007 2008 2009 2010

Gross Net

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SLIDE 27

Banking Sector: FX Position (Million USD)

(*) As of January, 28 Source: BRSA

  • 549

187

  • 71
  • 63

141

  • 217

16 408 161 470

  • 800
  • 600
  • 400
  • 200

200 400 600 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*

27

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SLIDE 28

Banking Sector: Return on Equity and Assets (%)

20.0 1.5 3.6 3.3 2.7 3.3 3.4 2.5 3.3 3.0 21.0 22.8 18.6 24.8 15.9 18.2 15.8 12.1

5 10 15 20 25 30

2002 2003 2004 2005 2006 2007 2008 2009 2010

Return on Equity Return on Assets

Source: BRSA 28

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SLIDE 29

Household Liabilities (% of GDP)

10 12 14 15 59 60 61 64 10 20 30 40 50 60 70 2006 2007 2008 2009

Turkey Euro Area

Source: CBRT, ECB 29

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SLIDE 30

Consumer Credits (billion TL)

1.5 1.8 2.9 3.2 3.2 2.2 27.9 45.7 65.0 90.1 90.1 126.9 20 40 60 80 100 120 140 2005 2006 2007 2008 2009 2010

FX Denominated TL Denominated

Source: BSRA 30

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SLIDE 31

 Public Sector Reform I. Public Financial Management and Control Law, 2003 II. Turkish Court of Accounts Law, 2010  Financial Sector Reform I. Restructuring the financial system and improving the capital adequacies. II. Banking Law, 2005 (Regulating the banking sector in line with the EU legislation)  Social Security and Health Reform I. Social Security Law, 2008 (Rehabilitating the social security system via parametric reform and unifying social security institutions, payments, introducing universal health insurance system)  Enhancing the Role of Private Sector I. The Coordination Council for the Improvement of Investment Environment II. FDI Law, 2003 III. Code of Obligations, 2011 IV. Commercial Code, 2011

Structural Reforms I

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SLIDE 32

 Labor Market Reform I. Employment Package, 2008  Energy Sector Reform I. Renewable Energy Law, 2005 II. Energy Efficiency Law, 2007 III. Nuclear Energy Law, 2008  Reforms regarding EU Accession

Structural Reforms II

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SLIDE 33

EMBI+ and EMBI+ Turkey Subindex

100 200 300 400 500 600 700 800 900 J-08 J-08 M-08 M-08 A-08 M-08 J-08 J-08 A-08 S-08 O-08 N-08 D-08 J-09 F-09 M-09 A-09 M-09 J-09 J-09 A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10 S-10 O-10 N-10 D-10 J-11 (bp) EMBI+ Turkey EMBI+

33

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SLIDE 34

Turkey’s CDS Level in Comparison with EU Countries

5 year CDS (bps)

861 569 441 308 292 282 266 262 264 241 221 184 177 168 165 144 94 89 87 86 86 85 61 54 54 48 37 34 100 200 300 400 500 600 700 800 900 1,000 Greece (BB+) Ireland (BBB+) Portugal (A+) Hungary (BBB-) Romania (BB+) Crotia(BBB-) Lithuania (BBB) Bulgaria (BBB-) Letonia (BB+) Spain (AA+) Greek Cypriot State (AA-) Malta (A+) Italy (AA-) Belgium(AA+) Turkey (BB+) Poland (A-) Estonia (A) France (AAA) Czech Rep. (A+) Slovakia(A+) Austria (AAA) Slovenia (AA) UK (AAA) Holland (AAA) Germany (AAA) Denmark (AAA) Finland (AAA) Sweden (AAA) As of February 11, 2011 Source: Bloomberg

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SLIDE 35

Turkey’s Credit Rating History

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

S&P Moody's Fitch

B3 / B- B2 / B B1 / B+ Ba3 / BB-

Positive Stable Negative

Ba2 / BB Ba1 / BB+ Baa3 / BBB- Baa2 / BBB 35

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SLIDE 36

THANK YOU For further information please contact our Investor Relations Office http://www.hazine.gov.tr/iro.htm Tel: +90 312 212 8887 Fax: +90 312 212 8550

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