1. 1 Turkish Economy : An Overview N. Kamuran MALATYALI

2. 2 Presentation Outline  Once Upon a Time : Land of Crises Anti-Inflationary Programme  Paving the Road  Structural Shift  2008 Syndrome  New Global Environment  Wuthering Heights  Turkey : A Hub with Relative Stability?

3. Once Upon A Time – Land of Crises  Turkish Economy Experienced Hard Times During the Previous Century  Between 1924-2001 (78 years) the number of (-) growth years: 14  (1927, 1932, 1935, 1940, 1941, 1944, 1945, 1949, 1954, 1979, 1980, 1994, 1999, 2001)  Recurring crises every 5.5 years, on the average  Long run average growth rate of the economy: %4.4 3

4. Once Upon A Time – Land of Crises  1990s were nightmare with respect to any indicator  Sustainability was the real issue  High Public Sector Borrowing Requirement => High Domestic Borrowing => High and volatile inflation + High Interest Rates + High rates of depreciation  Recurring Deep Crises: 1994, 1999  Volatility in Growth 4

5. Borrowing Requirement and Debt Stock 5

6. Real Rate of Interest 6

7. Growth and Contraction 7

8. Once Upon A Time – Anti-Inflationary Programme  To restore stability - Disinflation Programme of 2000 : Failure  2001 February Crisis  Transition to the Strong Economy Programme : Comprehensive restructuring (privatization, free market regulations), free float, sustainability in public finance, banking system rehabilitation 8

9. Paving the Road – Structural Shift 9

10. Real Rates of Interest 10

11. Increased Welfare 11

12. Contained Debt Risk 12

13. Paving the Road – 2008 Syndrome  2008 Global Crisis Deeply Affected the World  It is still under way  2001 Crisis of Turkey (collapse of the banking system and its rehabilitation) shielded Turkey in 2008. 13

14. 14 2008 Syndrome - Growth of the World Economy

15. 2008 Syndrome - World Trade Volume (% Change) 15

16. 2008 Syndrome – Turkish Current Account Balance 16

17. 2008 Syndrome - Paving the Road 17

18. New Global Environment  Things are pretty different beginning by 2008  System seeks shelter and a stable ground 18

19. Debt Stock/GDP (EU Definition) EU Definition of Debt Stock in EU Member Countries / GDP (%) 200520062007200820092010 Euro Zone (17 Count.)) 7068.466.269.979.385.1 EU(27 Countries) 62.861.55962.374.480 Greece100106.1105.4110.7127.1142.8 Italy105.9106.6103.6106.3116.1119 Belçgium92.188.184.289.696.296.8 Portugal62.863.968.371.68393 Germany6867.664.966.373.583.2 France66.463.763.967.778.381.7 Hungary61.865.766.172.378.480.2 UK42.543.444.554.469.680 Austria64.662.860.763.869.672.3 Netherlands51.847.445.358.260.862.7 Spain43 36.139.853.360.1 Turkey52.746.539.94046.142.2 19

20. Euro Imports of Goods and Services (% Change) 20

21. World Trade Volume (% Change) 21

22. 22 Pre-and Post-Growth Performance of the Global Crisis World Advanced Economies Emerging and Developing Economies

23. 23

24. 24 Turkish economy benefited from the positive global climate.

25. 25 Growth in the World Economy

26. Growth Performance 26 WorldAdvancedEmerging

27. Turkey : A Hub with Relative Stability?  Things have changed  Turkey has increased degree of openness  Stabilized economic structure  Foreign participation 27

28. AVERAGE GDP GROWTH RATES IN TURKEY OVER PERIODS 28

29. Development in the Measure of Openness of Turkey 29

30. Growth Performance of Developing Economies 30 Central and Eastern Europe Middle East and North Europe Emerging Asia Sub-Saharan Africa Latin America and the Caribbean

31. IMF Growth Projections 31 World Advanced Economies Emerging and Developing Economies

32. Growth in Advanced Economies 32 Euro-zoneG-7 Economies

33. Growth Comparisons 33 Emerging and Developing Economies Turkey_IMF Turkey_OVP

34. General Government Gross Debt / GDP 34 Advanced Economies Emerging Economies Turkey

35. 35 Growth Performance of Developing Economies, and Turkey

36. 36 Private Capital Flows towards Emerging Economies

37. 37

38. Current Account Deficit in Economies Similar To Turkey 38 Emerging and Developing Economies Central and East Europe Turkey(IMF) Turkey(OVP)

39. Paving the Road – Structural Shift 39

40. 40

41. 41 Periodic Growth Rates of the World Economy

42. 42 Current Account Deficit and Fund Flows