Notes on European Economy, Turkey and Istanbul Notes on European Economy, Turkey and Istanbul Prof. Dr. Murat Yulek Istanbul Chamber of Commerce 25 November, 2011 Istanbul

Organization  European economy  Turkey: some economic highlights  Rapidly developing infrastructure  Some notes on Istanbul

European Economy

European Tribulations: Slow Growth Source: IMF WEO

European Tribulations: Sovereign Debt & Default Risks

Comparison of Consolidated Euro Area, U.S. and Japanese Banking Sectors Source: Interim Report on Cumulative Impact on the Global Economy of Proposed Changes in the Banking Regulatory Euro AreaUSAJapan Number of banks6,4586, Total assets (trillion euro) Assets / GDP (%) Regulatory capital Tier 1 capital Liquid asset ratio Share of banks in credit intermediation Population (million)

Size of The Banking Sector in Europe’s Regions 2009 Source: EBF

European Tribulations: Bank Recap Needs CountryCapital shortfall (€bn) Number of banks failing the test Total number of banks participating in the stress test France1644 Germany6412 Greece1466 Italy2355 Spain UK004 Other EU Countries Total Source: AXA-IM Research

European Tribulations: Sovereign Debt & Default Risks Source: IMF Database Projections

European Tribulations: Sovereign Debt & Default Risks Increasing Risk Perceptions Flight to Quality

European Tribulations: Sovereign Debt & Default Risks

European Tribulations: Budgetary Imbalance Source: IMF WEO Projections

Source: IMF WEO * Germany, France, Italy, UK, Spain Projections European Tribulations: Budgetary Imbalance

European Tribulations: (Further) Rising Uncertainty (Globally)

billion euro Budget DeficitSovereign Debt France Germany Spain Italy UK European Tribulations: Budgetary Imbalance & Sovereign Debt

Turkey: Some Economic Highlights

(Too) Rapid Growth

Rapidly Growing Exports…

… with global integration but badly deteriorating trade balance

Young (and Still Growing) Population Population (millions) Median age (years) Population aged (millions) Turkey Germany France UK Italy Spain Europe Source: UN Stat

Young (and Still Growing) Population Turkey Germany France UK Italy Spain Europe Source: UN Stat Population Growth Rate (%)

Turkey: The Banking Sector Weathered the Storm Well Total assets498 Equity capital61 Total deposits291 Total credits273 Annual credit growth (%)36 CAR (%)16.4 Gross NPL (% of total credit portfolio)2.80 Net NPL (% of total credit portfolio)0.51 Consolidated Banking Sector (End-September 2011, billion euro) Source: BRSA

Strong Fiscal Balance

With Deterioriating External Balance

Some Notes on Istanbul* *Assistance of the Istanbul Development Agency in data and information acjnowledged with thanks.

If the earth were a single state, Istanbul would be its capital. Napoleon Bonaparte Population (millions, 2010) Ratio to National Population (%)Area (km²) Population Density (Population/km²) Istanbul1318%5,3132,551 Turkey74100%785,34796 EU (27)501680%4,422, ISTArBUL years (2010)71% of total Median Age(2010)30 Permanent foreign residents (officially registered, 2009)42,228 Actual foreign residents At the order of few hundred thousand Istanbul: Population Dynamics

Ranking in Europe Ranking in the World 2025 Estimates2008 GDPCityCountry LondonThe UK ParisFrance MoscowRussia MadridSpain IstanbulTurkey BarcelonaSpain RomeItaly MilanItaly ViennaAustria LisbonPortugal Istanbul: 5th Largest European City in Terms of GDP In PPP terms Istanbul is probably the largest European City.

Istanbul Economics: Rapid Growth

Istanbul Economics: Employment by Sectors 2010

World Ranking CityCountry 1IstanbulTurkey 2ShenzhenChina 3LimaPeru 4Singapore 5SantiagoChile 6ShanghaiChina 7GuangzhouChina 8BeijingChina 9ManilaThe Philippines 10Rio de JaneiroBrazil Istanbul Economics: Metropolitan Economic Performances After the Financial Depression 2010 Source: Brookings/LSE Global Metro Monitor

CompanySectorNet Sales (bn $) FORDAutomotive3.42 OYAK RENAULTAutomotive3.31 TOFAŞAutomotive3.11 ARÇELİKElectrical Machinery2.92 AYGAZLpg/Energy2.27 İÇDAŞ ÇELİKIron-Steel2.01 HABAŞIndustrial Medical Gas1.62 VESTELElectronics1.38 MERCEDES-BENZAutomotive1.27 UNILEVERConsumer Products1.20 Istanbul Economics: TOP 10 Companies

IstanbulTurkeyIstanbul’s Share Patent Applications1,3703,25042% Utility Model Applications1,3842,99446% Brand Name Applications (2009) 30,83259,83851% Industrial Design Applications 3,4446,56752% Istanbul Economics: R&D and Foreign Trade (2010) billion $ IstanbulTurkeyIstanbul’s Share Exports % Imports %

Business Services21% Automotive15% IT & Telecommunication10% Electrical & Electronics10% Machinery & Equipment9% Transport & transport Services9% Metals7% Food5% Plastic & Rubber5% Other9% Istanbul Economics: FDI inflows (2010)

MASS TRANSPORTATION (2009) # of VehiclesDaily # of PassengersShare % Land Transportation1,668,131 vehicles10,352, % Sea Transportation314 vessels380, % Rail Systems146.5 km rail line989, % Total 11,721,548100% Istanbul : Transportation AIRPORTS (millions, 2010)Domestic LinesInternational LinesTotal Atatürk Sabiha Gökçen7411 Total192443

There, God and human, nature and art are together, they have created such a perfect place that it is valuable to see. Lamartine Incoming Foreign Tourists (2010) Congresses and Events (2011, National and International) Istanbul7,824, Turkey28,632, Istanbul’s Share27%36% Istanbul : Tourism

Rank in EuropeCityCountry 1LondonThe UK 2ParisFrance 3BrusselsBelgium 4BerlinGermany 5FrankfurtGermany 9ZurichSwitzerland 10MoscowRussia 11IstanbulTurkey 12MunichGermany 13MilanItaly Istanbul : 11th in the Europe’s 40 top Cities* Source: Wealth Report 2010 (Citibank and Knight Frank) * Based on the following criteria: Economic Activity, Politica Power, Knowledge & Influence, Quality of Life

Istanbul : 17th in the Global Cities Endex (2010) Ranking in Europe Ranking in the World ScoreCityCountry LondonThe UK ParisFrance BrusselsBelgium BerlinGermany MadridSpain MunichGermany CopenhagenDenmark IstanbulTurkey MilanItaly DublinIreland Source: A.T. Kearney Global Cities Index

Istanbul : Ranked Top in Real Estate Investment Potential Source: Urban Land Institute *performance of existing investments,

Istanbul : Ranked Top in Real Estate Investment Potential Source: Urban Land Institute

OFFICE COSTS IN GLOBAL FINANCIAL CENTERS Annual Gross Cost (2010, €/m2/year) Tokyo1441 London (West End)1220 Hong Kong1207 Dubai899 Mumbai809 Moscow768 Milan667 Istanbul369 Istanbul : Real Estate Source: Cushman & Wakefield

BEST CITIES IN TERMS OF AVAILABLE OFFICE SPACE (2010) RankScoreCityCountry 10.63BerlinGermany 20.59ManchesterThe UK 30.56MadridSpain 40.54BirminghamThe UK 50.53BarcelonaSpain DublinIreland IstanbulTurkey LyonFrance StockholmSweden AmsterdamThe Netherlands Istanbul : Real Estate Source: Cushman & Wakefield