1. 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

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

3. European Economy

4. European Tribulations: Slow Growth Source: IMF WEO

5. European Tribulations: Sovereign Debt & Default Risks

6. 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 banks6,4586,839148 Total assets (trillion euro) 31.111.88.5 Assets / GDP (%)346.6121.1168.8 Regulatory capital12.514.29.6 Tier 1 capital9.411.46.8 Liquid asset ratio5.919.316 Share of banks in credit intermediation 73.823.652.6 Population (million)501.1310.6127.1

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

8. 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 Spain411725 UK004 Other EU Countries 221938 Total1225590 Source: AXA-IM Research

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

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

11. European Tribulations: Sovereign Debt & Default Risks

12. European Tribulations: Budgetary Imbalance Source: IMF WEO Projections

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

14. European Tribulations: (Further) Rising Uncertainty (Globally)

15. billion euro Budget DeficitSovereign Debt 200020102016200020102016 France-21-151-3882616402110 Germany27-82123219992140 Spain-6-98-59374639981 Italy-10-71-54130018432226 UK15-176-3046213001867 European Tribulations: Budgetary Imbalance & Sovereign Debt

16. Turkey: Some Economic Highlights

17. (Too) Rapid Growth

18. Rapidly Growing Exports…

19. … with global integration but badly deteriorating trade balance

20. Young (and Still Growing) Population Population (millions) Median age (years) Population aged 15- 64 (millions) 201020502010205020102050 Turkey739228.342.349 59 Germany82 7544.349.254 41 France6372 39.942.7 4142 UK62 7339.842.94143 Italy615943.249.64031 Spain46 5140.148.931 27 Europe738 719 40.145.7505412 Source: UN Stat

21. Young (and Still Growing) Population 20102050 Turkey1.140.08 Germany-0.20-0.34 France0.510.23 UK0.600.15 Italy0.23-0.20 Spain0.620.03 Europe0.11-0.19 Source: UN Stat Population Growth Rate (%)

22. 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

23. Strong Fiscal Balance

25. With Deterioriating External Balance

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

27. 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%4,422,773113.3 ISTArBUL 15-64 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

28. Ranking in Europe Ranking in the World 2025 Estimates2008 GDPCityCountry 154565LondonThe UK 268564ParisFrance 31512321MoscowRussia 42632230MadridSpain 53428182IstanbulTurkey 63542177BarcelonaSpain 74353144RomeItaly 84665136MilanItaly 95067122ViennaAustria 10667698LisbonPortugal Istanbul: 5th Largest European City in Terms of GDP In PPP terms Istanbul is probably the largest European City.

29. Istanbul Economics: Rapid Growth

30. Istanbul Economics: Employment by Sectors 2010

31. 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

32. 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

33. 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 53.17113.947% Imports 98.40185.553%

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

35. MASS TRANSPORTATION (2009) # of VehiclesDaily # of PassengersShare % Land Transportation1,668,131 vehicles10,352,00088.30% Sea Transportation314 vessels380,0003.30% Rail Systems146.5 km rail line989,5488.40% Total 11,721,548100% Istanbul : Transportation AIRPORTS (millions, 2010)Domestic LinesInternational LinesTotal Atatürk122032 Sabiha Gökçen7411 Total192443

36. 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) Istanbul7,824,994416 Turkey28,632,2041149 Istanbul’s Share27%36% Istanbul : Tourism

37. 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

38. Istanbul : 17th in the Global Cities Endex (2010) Ranking in Europe Ranking in the World ScoreCityCountry 126.22LondonThe UK 245.35ParisFrance 3113.29BrusselsBelgium 4163.03BerlinGermany 5173.02MadridSpain 15332.33MunichGermany 16372.23CopenhagenDenmark 17412.14IstanbulTurkey 18422.06MilanItaly 19441.84DublinIreland Source: A.T. Kearney Global Cities Index

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

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

41. 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

42. BEST CITIES IN TERMS OF AVAILABLE OFFICE SPACE (2010) RankScoreCityCountry 10.63BerlinGermany 20.59ManchesterThe UK 30.56MadridSpain 40.54BirminghamThe UK 50.53BarcelonaSpain 140.32DublinIreland 150.32IstanbulTurkey 160.31LyonFrance 170.31StockholmSweden 180.30AmsterdamThe Netherlands Istanbul : Real Estate Source: Cushman & Wakefield