Mehmet ŞİMŞEK Minister of Finance

2 Global Economic Outlook

3 Credit Conditions in the USA (Percentage Change) Source: FED

4 Credit Conditions in Europe (Percentage Change) Source: ECB

5 Source: IMF World Trade (Annual Percentage Change)

6 Global Growth Rates (%) Source: IMF

7 Source: IMF, The Economist Countries that Experienced the Highest GDP Contraction in 2009 (%)

8 Net Capital Inflow to Developing Countries (Billion $) Source: IMF

9 * Unemployment rate for March 2010 period. Source: OECD, The Economist Unemployment Rates (%)

10 Inflation Developments in the World (%) Source: IMF

11 Consumer Price Index (CPI) in Some Developing Countries (%) Source: OECD

12 Poverty Outlook (Those with Income below 1.25 Dollar per day, 2009, %) Source: WB

13 Budget Balance in Some Countries /GDP ( , %) Source: IMF, The Economist

14 Increase in Budget Deficits of Some Countries (y-o-y increase/GDP rate) Source: IMF, The Economist

15 Debt Stock/GDP (%) Source: IMF, Eurostat, Treasury

16 Interest Rates of Selected Countries* (%) Source: Central Banks of the Countries * As of

17 Volatility Index VIX ( ) Source: Reuters

18 Global Risk Appetite Index Source: Central Bank of Turkey

19 Baltic Dry Index ( – ) Source: Reuters

20 Basic Macroeconomic Problems of Turkey and Solution Offers

21 Current Account Deficit

22 Source: SPO Components of the Total Investments (Total Investments=100)

23 Current Account Balance (Billion $) Source: Central Bank of Turkey (CBT)

24 Foreign Trade of Turkey (Billion $) Source: TURKSTAT

25 Current Account Balance Except for Energy Import (Billion $) Source: CBT and TURKSTAT

26 Energy Prices and Current Account Balance (%) Source: TURKSTAT and CBT

27 Current Account Deficit: Solution Offers

28 Our Vision for Turkey Creating a country which is;  Competitive at global scale,  Transformed into an information society,  Completed the EU process.

29 Change in the Composition of Exports (Shares, %) Source: TURKSTAT

30 Number of Export Products amounting to more than 1 Billion Dollar Annually Source: TURKSTAT

31 Number of countries that Turkey exports more than 1 billion dollar annually Source: TURKSTAT

32 R&D Reform  High-Quality Products  Productivity  Entrepreneurship  Technology-Intensive Production  Innovation

33 R&D Expenditure (Million TL) Source: TURKSTAT

34 R&D Expenditure Per Capita (Purchasing Power Parity, $) Source: TUBITAK

35 Education  For the last 7 years, we have allocated the highest resource to education.  Human capital is one of the most significant factors that affect growth and competitiveness.  We enhanced the quality of human capital.  We increased investments in human capital.

36 Budget of the Ministry of Education (Billion TL) Source: Ministry of Education (MoE)

37 Gross Enrollment Ratio (%) Source: MoE * Enrollment ratios of the higher education are for the academic year of

38 Number of Classrooms Built Source: MoE

39 Total Number of Universities Source: Student Selection and Placement Center

40 Total Number of Schools, Faculties and Institutes Source: MoE

41 Education System Index (Coverage of the Requirements of a Competitive Economy*, 2009) (*) Index scale is in the range of Source: IMD

42 Source: State Hydraulic Works Total Capacity of the Hydroelectric Energy Project under Construction (MW, Annually)

43 Source: State Hydraulic Works Number of Hydroelectric Power Plants Under Progress

44 Position of Turkey in Europe in terms of its Wind Energy Capacity Source: EWEA

45 Energy Map of Turkey Petroleum and Natural Gas Search/Production RegionGold Deposit Area Source: Ministry of Energy and Natural Resources

46 Kırklareli Pityon Mandıra Uzunköprü Pehlivanköy Adapazarı Bandırma Balıkesir Manisa Denizli Zonguldak MALATYA Alayunt Kütahya Meydanekbez KONYA Karaman KAYSERİ Elazığ Muş Tatvan Van Kapıköy Diyarbakır Kurtalan Gaziantep Mardin Nusaybin Narlı Kahramanmaraş Mersin Çankırı Samsun Amasya Kars Erzurum Erzincan Irmak Polatlı Van Gölü B L A C K S E A A E G E A N S E A İSTANBUL Çerkezköy (Sirkeci) Burdur Isparta İskenderun Aydın Batman İzmit Karabük Uşak Yerköy Divriği SİVAS ADANA ANKARA AFYON İZMİR Aliağa Kapıkule Yozgat BURSA OSMANELİ ANTALYA ESKİŞEHİR Sincan Tiflis Kerkük Musul Bağdad Halep Total Investment Cost:12 billion 530 million $ Line Construction Cost:10 billion 400 million $ 74 High Speed Trains : 2 billion 130 million $ WHEN HIGH SPEED TRAIN PROJECTS ARE COMPLETED: Annually ; 40 million passengers 1 billion 665 million $ revenue 916 million $ net revenue Lines put into operation Lines under construction TARGETS FOR TURKISH STATE RAILWAYS High Speed Train Lines Lines planned to be constructed

47 Construction Photos of Ankara-Istanbul High Speed Train Project New high speed line Current line

48 Divided Roads Source: Ministry of Transportation

Year-end Km Km Target for Km Divided Road Constructions: Target for 2012 Source: Ministry of Transportation

50 CONTRIBUTION TO ECONOMY : Contribution of km divided road constructed after 2003 to the Economy Decrease in the annual travel period In return for 96 Million hours 3,345 Billion TL Gas saving In return for 550 Million TL 470 Billion TL TOTAL ANNUAL SAVINGS 3,815 Billion TL Total Divided Roads (Km)

51 Total Divided Roads (Km) Source: Ministry of Transportation

52 ATATÜRK ÇORLU UŞAK ÇANAKKALE KÖRFEZ A.MENDERES M.BODRUM KONYA ANTALYA DALAMAN S.DEMİREL ESENBOĞA KAYSERİ ADANA N.KAPADOKYA SAMSUN-ÇARŞ MALATYA ELAZIĞ DİYARBAKIR ERZİNCAN SİİRT F.MELEN MUŞ ERZURUM AĞRI TRABZON KARS ADIYAMAN K.MARAŞ Ş.URFA G.ANTEP MARDİN BURSA-YEN SİVAS Airports IN SERVICE UNDER CONSTRUCTION ÇARDAK HAKKARİ ŞIRNAK IĞDIR ÇUKUROVA BALIKESİR- MERKEZ KÜTAHYA SİNOP A.MERZİFON S.GÖKÇEN TOKAT HATAY BATMAN SİİRT ESKİŞEHİR ZONGULDAK BİNGÖL Source: Ministry of Transportation

53 Number of Passengers (thousand persons) Source: Directorate General of State Airports Authority

54 Fixed Capital Investments/GDP (%) Source: SPO

55 Contribution of the Private Sector to the GDP (pp.) Source: TURKSTAT

56 Public Investments/GDP (%)

57 New Stimulus Package  VAT exception  Customs Duty Exemption  Income and Corporate Tax Cut  Financial Aid for Employer Share in Social Security Premiums  Investment Area Assignment

58 Ranking of Countries that Attract Most FDI YearRank of Turkey Foreign Direct Investment (Billion Dollar) , , , , , , , , ,3 Source: UNCTAD

59 Foreign Direct Investments (Billion $) Source: CBT

60 Change in the International Competitiveness ( ) Source: WEF Global Competitiveness Report, 2009

61 Starting Business (Number of Transactions) Source: World Bank Doing Business Report, 2010

62 Starting Business (Duration, Days) Source: World Bank Doing Business Report, 2010

63 GAP (Southeastern Anatolia Project) Public Investments (Billion TL) Source: Prime Ministry Southeastern Anatolia Project Regional Development Administration

64 Unemployment

65 Unemployment Rates in Turkey (%) Note: Data after 2004 was revised by the TURKSTAT according to the new population projections. Source: TURKSTAT 65

66 Sectoral Distribution of Employment (%) Source: TURKSTAT

67 Non-Agricultural Employment (Thousand Persons) Source: TURKSTAT It was revised according to the new population projections of and after 2004.

68 Employment Status of Those Employed (%) Source: TURKSTAT

69 Unemployment : Solution Offers

70 Labor Market Reform-1  Reduction of the labor costs  5 pp deduction in employer share in the social security premiums  Reduction in employer share in the social security premiums paid for all newly hired women and young employees in decreasing rates for 5 years  Covering employer shares in social security premiums paid for the disabled employees  Removing the obligation to hire an ex-convict  Providing premium support for additional employment  Increase in the short term allowances and extension of the period envisaged for this benefit  Increase in the amount of unemployment fund payment

71  Strengthening active labor force programs  Expansion of vocational training activities provided by the İŞKUR (Turkish Employment Agency)  Enabling citizens to start their own business by providing them entrepreneurship and training consultancy  Employment of the unemployed youngs as interns  Temporary tax cuts in certain sectors  More resource allocation to the employment- intensive development projects such as GAP (Southeatern Anatolia Project), DAP (Eastern Anatolia Project) and KOP (Konya Plain Project)  Fighting against the informal economy  Increasing punishment and enhancing audits Labor Market Reform-2

72 Unemployment by Education Level (%) Source: TURKSTAT

73 Part-Time Works (%, 2008) Source: OECD

74 Budget Deficits and Borrowing

75 Central Government Budget Deficit/GDP (%)

76 Average Budget Deficit/GDP (%) * Budgets in are consolidated but the others are central government budget. ** Before 1998 the previous GDP series are used while after that year the new GDP series are used.

77 General Government Budget Deficit (EU Definition)/GDP (%) Maastricht Criteria: 3 Source: TURKSTAT and SPO

78 Interest Expenses/GDP (%)

79 Interest Expenses/Tax Expenditures (%)

80 Borrowing Requirements of the Public Sector/GDP (%) Source: SPO

81 Source: Treasury TRY Denominated Zero Coupon Borrowing Rates (Comp. Ann. %)

82 Source: Treasury Public Net Debt Stock (Billion TL)

83 Public Net Debt Stock/GDP (%) Source: Treasury

84 Debt Stock resulted by imposing Annual Rates on the Internal Debt Stock in 2002 (Million TL) Source: Treasury

85 Our Debts to the IMF (Million $) Source: Treasury

86 Gross External Debt Stock (Billion $) Source: Treasury

87 Gross External Debt Stock/GDP (%) Source: Treasury

88 Debt Stock (EU Definition)/GDP (%) Source: Treasury, SPO

89 Rank of Turkey among the EU Member States in terms of the General Government Debt Stock (EU Definition)/GDP Ratio ( ) Source: Eurostat

90 Debt Stock (Billion $) Source: IMF, Eurostat, Treasury

91 Household Debt/GDP (2007, %) Source: GS

92 Budget Deficits and Borrowing: Solution Offers

93 Informal Economy and Justice in Taxation

94 Tax + Social Security Premium Burden on the Average Wages in the OECD Countries (2009,%) * AGI: Minimum living allowance Source: OECD

95 Rank of Turkey among the OECD Countries in terms of Tax + Social Security Burden on the Average Wages Source: OECD

96 Tax Burden in the OECD Countries (Tax Revenues/GDP, 2008, %) * 2009 year-end realization figures ** 2007 data is used for the countries that do not have 2008 estimations Source: OECD

97 Tax Burden in the OECD Countries (Tax Rev.+Soc.Sec. Prem.+Local Adm. Rev./GDP, 2008, %) * Figures for the tax revenues are 2009 year-end realizations while Social Security Premiums and Local Administration Revenues are year-end estimations. ** 2007 data is used for the countries that do not have 2008 estimations Source: OECD

98 The Top Bracket Rates in Income Tax in the OECD Countries (2008,%) Source: OECD

99 Rank of Turkey among the OECD Countries in terms of the Top Bracket of the Income Tax (30 Countries) Source: OECD

100 Taxes imposed on the Income and Profits/ GDP by countries (Excluding Social Security Premiums, 2008, %) * 2009 year-end realization figures ** 2007 data is used for the countries that do not have 2008 estimations Source: OECD

101 Taxes imposed on the Income and Profits/ GDP by countries (Including Social Security Premiums, 2008, %) * Figures for the tax revenues are 2009 year-end realizations while Social Security Premiums are year-end estimations. ** 2007 data is used for the countries that do not have 2008 estimations Source: OECD

102 Taxes imposed on Goods and Services/GDP by Countries (Excluding Local Administration Taxes, 2008, %) * 2009 year-end realization figures ** 2007 data is used for the countries that do not have 2008 estimations Source: OECD

103 Taxes imposed on Goods and Services/GDP by Countries (Including Local Administration Taxes, 2008, %) * Figures for the tax revenues are 2009 year-end realizations while Local Administration Revenues are year- end estimations. ** 2007 data is used for the countries that do not have 2008 estimations Source: OECD

104 Taxes imposed on Properties/GDP by Countries (Excluding Local Administration Taxes, 2008, %) * 2009 year-end realization figures ** 2007 data is used for the countries that do not have 2008 estimations Source: OECD

105 Taxes imposed on Properties/GDP by Countries (Including Local Administration Taxes, 2008, %) * Figures for the tax revenues are 2009 year-end realizations while Local Administration Revenues are year- end estimations. ** 2007 data is used for the countries that do not have 2008 estimations Source: OECD

106 Share of the Direct and Indirect Taxes in the Total Taxes in the OECD Countries (Excluding Social Security Premiums, 2008)* *2007 data is used for the countries that do not have 2008 estimations. **Figures for Turkey are 2009 year-end tax revenue realizations. Note: In 2010, Indirect-Direct Taxes/ GDP Ratios including Social Security Premiums are estimated to be 50.2 percent for Direct Taxes, 49.8 percent for Indirect Taxes and the Ratio excluding Social Security Premiums is forecasted to be 33.1 percent for Direct Taxes and 66.9 for Indirect Taxes. Source: OECD

107 Share of the Direct and Indirect Taxes in the Total Taxes in the OECD Countries (Including Social Security Premiums, 2008)* *2007 data is used for the countries that do not have 2008 estimations. ** Figures for Turkey are calculated with 2009 year-end tax revenue realizations and estimations for Social Security Premiums revenues and 5 percent state aids for the Social Security Premiums is taken into consideration. Note: In 2010, Indirect-Direct Taxes/ GDP Ratios including Social Security Premiums are estimated to be 50.2 percent for Direct Taxes, 49.8 percent for Indirect Taxes and the Ratio excluding Social Security Premiums is forecasted to be 33.1 percent for Direct Taxes and 66.9 for Indirect Taxes. Source: OECD

108 Tax Burden on the Profit Shares Distributed by the Corporations (2009, %) Source: OECD

109 Rank of Turkey among the OECD Countries in terms of the Tax Burden on the Corporate Profits (30 Countries) Source: OECD

110 Corporate Tax Rates in the OECD Countries (2009,%) Source: OECD

111 Rank of Turkey among the OECD Countries in terms of the Lowest Corporate Tax Rates (30 Countries) Source: OECD

112 Has Turkey Prospered during the Ruling Period of AKP?

113 GDP Growth Rates (%) Source: TURKSTAT

114 Average Growth Rates by Periods (%) Source: TURKSTAT

115 Gross Domestic Product (Million $) Source: TURKSTAT

116 GDP per capita ($) Source: TURKSTAT, SPO

117 The Top Largest 20 Economies in the World (GDP, 2009, Billion $) Source: IMF

118 The Largest Economies in the Europe (As of 2008 GDP, GDP by Purchasing Power Parity, Trillion $) Source: IMF

119 Quintiles (groups of 20 percent) ranked by the Equivalised Disposable Household Income Note: When individuals are divided into 5 groups by being ranked from lower to higher as per their equivalised disposable household incomes; “First quintile” is defined as the lowest income group while “Last quintile” as the highest income group. Source: TURKSTAT

120 Poverty Outlook (those having an income below 1.25 per day, 2009, %) Source: WB

121 Poverty Outlook in Turkey (%) Source: TURKSTAT

122 Hunger and Poverty Thresholds in Turkey (TL) Source: TURKSTAT

123 Automobile Production and Sales (thousand units) Source: OSD

124 Source: Treasury Production and Sales of Major Appliances (thousand units)

125 LCD Use Source: Turktrade

126 Estimated Number of Internet Users (thousand persons) Source: Information and Communication Technologies Authority

127 Some Products that can be purchased by the net minimum wage Source: TURKSTAT

128 Some Products that can be purchased with the Lowest Civil Servant Salary Source: TURKSTAT

129 Salary and Wage Changes between In the period of January 2003 to January 2010, cumulative change in CPI is 97.8 percent. Moreover the following changes experienced in the period of January 2002 to January 2010 on the same basis: The lowest civil servant salary increased by percent from 392 TL in December 2002 to TL in January Net minimum wage increased by percent from 184 TL in December 2002 to 577 TL in January The lowest retirement pension of Social Security Institution increased by from 257 TL in December 2002 to 695 TL in January The lowest retirement pension of BAĞ-KUR (insurance scheme for the self-employed) rose by from 149 TL in December 2002 to 557 TL in January The lowest farm retirement pension of BAĞ-KUR rose by from 66 TL in December 2002 to 395 TL in January The lowest retirement pension of civil servants increased by from 377 TL in December 2002 to 865 TL in January The Old-Age (65 years) Pension increased by percent from 24 TL in December 2002 to 97 TL in January Muhtar (head of a village or a quarter in district) salaries increased by percent from 97 TL in December 2002 to 342 TL in January These salary amounts and rates clearly indicate that financial situation of the working, retired and low-income people has improved as compared to 2002 and there are real increases in their incomes.

130 Inflation Developments in Turkey (1980–2010) Source: TURKSTAT and CBT

131 Average Inflation Rate (%) Source: TURKSTAT and CBT

132 Realized Inflation and Year-end Inflation Targets (January 2002 – May 2010, %) Source: TURKSTAT and CBT

133 Turkey in the Global Inflation Ranking Total number of countries is 205 and ranking is from highest to lowest. Source: IMF, TURKSTAT, CBT