This indicator set is prepared for users to give up-to-date information about different areas of Turkish Economy.

Transcription

1 This indicator set is prepared for users to give up-to-date information about different areas of Turkish Economy. This document is updated at the first day of every week. Last update: March 6,

2 TURKISH ECONOMY Undersecretariat of Treasury March 2017

3 CONTENTS Turkish Economy in the World...4 Demographic Profile...7 Growth...11 Employment...28 Inflation...40 Foreign Trade and Balance of Payments...52 Public Finance...72 Debt Management...81 Financial Sector Market Indicators Investment Environment Relationship with the IMF and EU Social Security Labor Market R&D Energy Sector

4 TURKISH ECONOMY IN THE WORLD 4

5 World s Biggest Economies (GDP based on Purchasing Power Parity, Trillion Dollar, 2015) Source: IMF, World Economic Outlook, October 2016 * Estimate 5

6 Europe s Biggest Economies (GDP based on Purchasing Power Parity, Trillion Dolar, 2015) Czech Republic Norway Austria Romania Sweden Switzerland Belgium Netherlands Poland Turkey Spain Italy France United Kingdom Germany Source: IMF, World Economic Outlook, October 2016 * Estimate 6

7 DEMOGRAPHIC PROFILE 7

8 Favourable Demographics Demographic Profile* (as of 2013) Bulgaria Czech Rep Hungary Ukraine Poland Slovak Rep Romania Europe Russia Turkey % % 20% 30% 40% 50% 60% 70% 80% 90% 0% (*) Estimates 0-14 Age Age 60+ Age Source: UN 8

9 Favourable Demographics Demographic Profile (as of 2050) Romania Poland Slovak Rep Czech Rep Bulgaria Hungary Europe Turkey Ukraine Russia % % 20% 30% 40% 50% 60% 70% 80% 90% 0% 0-14 Age Age 60+ Age Source: UN 9

10 Turkey: Population Prospects (Million People) Source: Ministry of Development, Medium Term Economic Programme

11 GROWTH 11

12 GDP Growth Rates (%, YoY) Source: TURKSTAT 12

13 GDP Growth Rate (Annual Average, %) Source: TURKSTAT, Undersecretariat of Treasury 13

14 GDP Growth Rate Projections (%) Source: Ministry of Development, Medium Term Economic Programme

15 Volatility of Growth (Coefficient of Variation of the Growth Rates) Source: TURKSTAT, Undersecretariat of Treasury 15

16 Per Capita GDP (USD) 13,000 12,000 11,000,931 11,205 11,588,560 12,480 12,112 11,014,000 9,000 8,000 7,000 6,000 5,961 7,304 7,906 9,656 8,980 5,000 4,698 4,000 3,581 3,000 2, Source: TURKSTAT 16

17 Per Capita GDP, 2015 (Purchasing Power Parity, EU-27=0) Trend line: moving average Source: EUROSTAT 17

18 PPP Adjusted Per Capita GDP Projections (USD) 25,000 24,000 24,077 23,000 22,666 22,000 21,367 21,000 20,396 20,000 19,000 18, Source: Ministry of Development, Medium Term Economic Programme

19 Comparison of Europe and Turkey: Real GDP Growth (2001=0) Source: OECD Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q3 20 Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Turkey Hungary Poland Spain Portugal Italy Euro Area

20 Contribution to GDP Growth (%) Private Cons. Gov. Cons. Total Investment Net Export GDP Growth Source: TURKSTAT 20

21 Components of Demand in Europe and Turkey: (2001=0) Private Consumption Export Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q3 20 Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q3 20 Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q3 2016Q1 Turkey Hungary Poland Spain Portugal Italy Euro Area EXPORT Tu rkey Hungary Poland Spain Portugal Ita ly Euro Area Gross Fixed Capital Formation Import İthalat 2001 Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q3 20 Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q3 20 Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q3 2016Q1 Tu rkey Hungary Poland Spain Turkey Hungary Poland Spain Portuga l Ita ly Euro Area Portugal Italy Euro Area Source: OECD

22 Productivity Index of Total Industry Productivity per hour Linear Trend (Productivity per hour) Q1 06 Q3 07 Q1 07 Q3 08 Q1 08 Q3 09 Q1 09 Q3 Q1 Q3 11 Q1 11 Q3 12 Q1 12 Q3 13 Q1 13 Q3 14 Q1 14 Q3 15 Q1 15 Q3 16 Q1 16 Q3 Source: TURKSTAT, Undersecretariat of Treasury

23 Productivity and Real Wages in Total Industrial Sector (Per Hour Worked) Real Unit Wage Index Real Wage Index Productivity Index 70 Source: TURKSTAT, Undersecretariat of Treasury Q1 05 Q3 06 Q1 06 Q3 07 Q1 07 Q3 08 Q1 08 Q3 09 Q1 09 Q3 Q1 Q3 11 Q1 11 Q3 12 Q1 12 Q3 13 Q1 13 Q3 14 Q1 14Q3 15 Q1 15 Q3 16 Q1 16 Q3

24 Industrial Production Index (Seasonally Adjusted) Latest data as of December 2016 Source: TURKSTAT 24

25 Capacity Utilization Rate of Manufacturing Industry (Seasonally Adjusted, %) As of February 2017 Source: CBRT

26 Real Sector Confidence Index As of February 2017 Source: CBRT 26

27 Consumer Confidence Index As of February 2017 Source: TURKSTAT 27

28 EMPLOYMENT 28

29 Unemployment Rate * (%) * The Household Labor Force Survey has started to report a new series of data since the period of February 2014 within the framework of the European Union criteria. Results regarding the periods 2005-January 2014 are estimated by an econometric model. Source: TURKSTAT 29

30 Youth Unemployment Rate (Seasonally Adjusted, %) Source: OECD 30

31 Employment * (Seasonally Adjusted, Million People) *As of November The Household Labor Force Survey has started to report a new series of data since the period of February 2014 within the framework of the European Union criteria. Results regarding the periods 2005-January 2014 are estimated by an econometric model. Source: TURKSTAT 31

32 Labour Force Indicators * (Seasonally Adjusted) *As of November The Household Labor Force Survey has started to report a new series of data since the period of February 2014 within the framework of the European Union criteria. Results regarding the periods 2005-January 2014 are estimated by an econometric model. Source: TURKSTAT 32

33 Labour Force Indicators * (Seasonally Adjusted) Labour Force Participation Rate (%) Employment Rate (%) Unemployment Rate (%, right axis) *As of November The Household Labor Force Survey has started to report a new series of data since the period of February 2014 within the framework of the European Union criteria. Results regarding the periods 2005-January 2014 are estimated by an econometric model. Source: TURKSTAT 33

34 Employment Developments by Sector * Agriculture (million people) Industry (million people) Construction (million people) Services (million people) *As of November The Household Labor Force Survey has started to report a new series of data since the period of February 2014 within the framework of the European Union criteria. Results regarding the periods 2005-January 2014 are estimated by an econometric model. Source: TURKSTAT 34

35 Sectoral Transition of Employment 0% 90% 80% 70% 60% 50% 40% 30% 20% % Sector Shares in Total Employment (%) Sector Contributions to Employment Growth(% points) 0% Agriculture Industry Construction Services Source: TURKSTAT 35

36 Employment Status at Work (%) 0% 90% 80% 70% 60% 50% 40% 30% 20% % 0% Unpaid Family Worker Own Account Worker/Employer Regular Employee/Casual Employee Source: TURKSTAT 36

37 Informal Employment Rate (%) Source: TURKSTAT 37

38 Labour Force Participation Rate (%) Female Male Total Source: TURKSTAT 38

39 Labour Force Participation Rate by Education Level (2015, %) Male Female Higher Education Higher Education Note: The balloon size reflects the labour force share of the relevant group. Source: TURKSTAT 39

40 INFLATION 40

41 Average Inflation in Periods (%) Source: TURKSTAT 41

42 Year End CPI Forecasts in (%) * (*) Realization. Source: Ministry of Development, Medium Term Economic Programme , October

43 Inflation: Recent Developments Food, Energy and Core Inflation (February 2006 February 2017, year-on-year percentage change) Source: TURKSTAT, CBRT 43 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb- Agu- Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Food Energy Goods excluding energy and food

44 Inflation: Recent Developments Services Inflation and Selected Sub-items (February 2006 February 2017, year-on-year change, percent) Source: TURKSTAT, CBRT 44 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb- Agu-20 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Services Transport Services Rent Restaurants and Hotels

45 Inflation Overall Trend* Inflation Trend (January 2006 February 2017, percentage change) (%) (*) As of February Monthly change of seasonally adjusted SCA-C index (3 month moving average). Source: TURKSTAT, CBRT 45

46 Inflation Main Determinants Contribution to CPI Inflation (Percentage Share) Average of February Food Energy Tobacco Others 0 Food Energy Tobacco Others Source: TURKSTAT, Undersecretariat of Treasury 46

47 Inflation and Expectations*: (Annual % Change) CPI 12 Months Months Target: 5.0 % 2018 Target: 5.0 % (*) CBRT s Survey of Expectations as of February CBRT s Survey of Expectations has been released once a month since January, Source: CBRT, TURKSTAT 47

48 Annual Inflation and Expectations (%) Inflation Expectations (February 2017) End year months months months 24 months 4 Year End Target Source: CBRT s Survey of Expectations 48

49 Wheat 450 Metal Energy Price Index of Selected Commodities (2005=0)* Rice Energy Metal Wheat Rice *As of January Source: IMF

50 Inflation Developments in the World Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar- Aug- Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Oct-14 Mar-15 Aug-15 Jan-16 Jun-16 Nov-16 Turkey Developing Countries World Developed Countries Source: IMF, TURKSTAT

51 Turkey s Rank According to Inflation Figures The total number of countries is 177 as of June, The ranking is in descending order. Source: IMF 51

52 FOREIGN TRADE and BALANCE OF PAYMENTS 52

53 Annual Exports (Billion USD) * Source: TURKSTAT (*) Annualized as of January 53

54 Annual Imports (Billion USD) * Source: TURKSTAT (*) Annualized as of January 54

55 Export and Import Growth (Annualized Percentage Change over the Previous Year) Exports Imports Source: TURKSTAT

56 Exports in Europe and Turkey (2001=0) Source: OECD Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q3 20 Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q3 2016Q1 EXPORT Turkey Hungary Poland Spain Portugal Ita ly Euro Area

57 Export Performance (Average Annual Growth Rate, ) World Euro Area Developing Asia Middle East and North Africa Latin America Turkey Source: TURKSTAT, IMF World Economic Outlook October

58 Exports Targets (FOB, Billion USD) Source: Ministry of Development, Medium Term Economic Programme

59 Imports (% of GDP) Capital goods Intermediate goods Consumption goods Source: TURKSTAT

60 60 60 Brent Oil Price (USD/bbl) Jun-02 Oct-02 Feb-03 Jun-03 Oct-03 Feb-04 Jun-04 Oct-04 Feb-05 Jun-05 Oct-05 Feb-06 Jun-06 Oct-06 Feb-07 Jun-07 Oct-07 Feb-08 Jun-08 Oct-08 Feb-09 Jun-09 Oct-09 Feb- Jun- Oct- Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Source: Reuters

61 Impact of Energy Prices to Imports (Billion USD) Reel Energy Imports with 20 Prices Price Effect Total Enegy Imports Source: TURKSTAT, Undersecretariat of Treasury 61

62 Machinery Imports (Billion USD) * 2002 Average Source: TURKSTAT (*) Annualized as of January 62

63 Foreign Trade (% of GDP, 2015) Trend line: Moving Average Ireland Russia Czech Rep. Germany Netherlands Norway Switzerland Slovenia Belgium Hungary Denmark Italy Slovak Rep. Poland Sweden Finland Japan Austria Spain France Iceland USA Romania Portugal UK Lithuania Estonia Bulgaria Latvia Turkey Greece Luxembour Morocco Cyprus Malta Source: WTO, IMF World Economic Outlook October 2016

64 Current Account Balance / GDP (%) CA Balance/GDP CA Balance/GDP (Excluding Energy) Souce: CBRT, Undersecretariat of Treasury 64

65 Current Account Balance (% of GDP, 2015) Trend line: Moving Average - 65 Switzerland Ireland Malta Norway Netherlands Germany Denmark Luxembour Sweden Russia* Slovenia Hungary Iceland Japan Austria Italy Estonia Spain Bulgaria Czech Rep. Portugal Finland Belgium Greece France Poland Romania Latvia* Slovak Rep. Lithuania Morocco USA Cyprus Turkey UK (*) Figures represent IMF estimates. Source: IMF World Economic Outlook October 2016

66 Financing of Current Account Deficit (Billion USD) Current Account Balance Capital Inflows (Excluding Reserves) Foreign Direct Investment Non-Bank Private Sector s Net Credits Other (Net) Net Errors and Ommissions Bank s Currency and Deposits Change in Reserves Source: CBRT 66

67 Average Foreign Direct Investment Inflows (Billion USD) Source: CBRT

68 Capital Inflows (Billion USD) Short-Term Capital Direct Investments (Net) Long-Term Capital Portfolio Investments Source: CBRT 68

69 Central Bank s Gross FX Reserves (Billion USD) $91.1 billion* J 02 A J O J 03 A J O J 04 A J O J 05 A J O J 06 A J O J 07 A J O J 08 A J O J 09 A J O J A J O J 11 A J O J 12 A J O J-13 N T O J-14 A J O J-15 A J O J-16 A J O J 17 (*) As of February 24, Source: CBRT 69

70 Current Account Balance Targets (Billion USD) Source: Ministry of Development, Medium Term Economic Programme

71 Current Account Balance Targets (% of GDP) Source: Ministry of Development, Medium Term Economic Programme

72 PUBLIC FINANCE 72

73 Central Government Budget Deficit (% of GDP) *2017*2018*2019* (*) : Medium Term Program targets Source: Ministry of Finance, MTP 73

74 General Government Budget Deficit Excl. Privatization (% of GDP) (*) : Medium Term Program targets Source: Ministry of Development, MTP 74

75 EU Defined General Government Budget Deficit (% of GDP) Maastricht Criterion: 3.0 % Source: Eurostat 75

76 General Government Deficit (% of GDP, 2015) Maastricht criterion: 3 % Source: Eurostat 76 Ireland Greece UK Portugal Spain Latvia Poland Slovakia Lithuania France Romania Slovenia S. Cyprus Netherlands Czech Rep. Italy Austria Germany Hungary Croatia Belgium Malta Bulgaria Turkey Denmark Finland Luxembourg Estonia Sweden

77 Public Sector Borrowing Requirement (% of GDP) Avg * 2017* 2018* 2019* 0.9 (*) : Medium Term Program targets Source: Ministry of Development, MTP 77

78 Public Sector Primary Surplus (Program Definition) (% of GDP) 6,0 5,3 5,0 4,6 4,6 4,3 4,0 3,0 3, Average: 2.1 2,0 1,0 0,0 0,5 1,5 0,7 1,6 0,9 0,9 0,5 0,6 0,0 0,9-1,0-2,0-1,0-1,2-0,6 (*) :Medium Term Program targets Source: For pre-2012 Undersecretariat of Treasury, for 2012 and onwards Ministry of Development 78

79 Privatization Implementations (Billion USD) Source: Privatization Authority 79

80 Medium Term Program (% GDP) Central Government Budget Balance Central Government Revenues Central Government Expeditures Central Government Primary Balance (IMF Definition) Central Government Revenues (IMF Definition) Central Government Primary Expenditures (IMF Definition) Rest Of Public Primary Balance (IMF Definition) Total Public Sector Primary Balance (IMF Definition) Source: Ministry of Development, Medium Term Program

81 DEBT MANAGEMENT 81

82 General Government Gross Debt Stock (EU Defined, % of GDP) Maastricht Criterion: 60 % Q1 Source: Undersecretariat of Treasury 2016 Q Q3 82

83 Japan Greece Italy Portugal Cyprus Belgium USA Spain France Ireland Canada United Kingdom Austria Slovenia Hungary Germany Netherlands Malta Finland Slovakia Poland Sweden Lithuania Czech Republic Denmark Romania Latvia Turkey Bulgaria Luxembourg Estonia General Government Gross Debt (% of GDP, 2015) Maastricht Criterion: 60 % Source: Eurostat (Updated: Apr 25, 2016), Undersecretariat of Treasury (As of Dec. 30, 2016) For USA, Japan, Canada: IMF World Economic Outlook (April 2016)

84 EU Defined Debt Stock (% of GDP) Euro area (17 countries) European Union (27 countries) Greece Italy Portugal Belgium Spain France United Kingdom Austria Hungary Germany Netherlands Turkey Source: Eurostat, (Updated: ); Undersecretariat of Treasury, (As of Dec. 30, 2016) 84

85 EU Defined Debt Stock Targets (% of GDP) Source: Ministry of Development, Medium Term Economic Programme , October

86 Public Net Debt Stock (% of GDP) Q Q Q3 TL FX Denominated/Indexed Source: Undersecretariat of Treasury 86

87 Public Net Debt Stock (Billion TL) Q Q Q3 I- Public Gross Debt Stock Central Government Rest of the Public Sector II- Assets and Public Sector Deposit Central Bank Net Assets Public Sector Deposits Unemployment Insurance Fund III- Public Net Debt Stock Source: Undersecretariat of Treasury 87

88 Public Net Debt Stock (Billion TL) Q Q Q3 Source: Undersecretariat of Treasury 88

89 Central Government Interest Payments / GDP (%) * Source: Ministry of Finance (*) Provisional 89

90 Central Government Interest Payments / Tax Revenues (%) * Source: Ministry of Finance (*) Provisional 90

91 Interest Composition of Central Government Gross Debt (%) Dec Fixed Floating Source: Undersecretariat of Treasury 91

92 Currency Composition of Central Government Gross Debt (%) Dec TL Foreign Exch. Source: Undersecretariat of Treasury 92

93 Sensitivity of General Government Debt to Shocks Change in real exchange rate app/dep + / points + / points by 5 percentage points Change in TL interest rate by 500bp + / points + / points Change in GDP growth rate by 2 percentage points Change in Primary Surplus/GDP ratio by 1 percentage point + / points + / points + / points + / points Note: The effects of scenarios on General Government Debt Stock/GDP ratio (as defined by EU standards) measured by deviations from baseline scenarios based on end-2001 and end-2015 stock realizations. Source: Undersecretariat of Treasury 93

94 Share of Foreign Residents in Domestic Debt Stock (%) Nov-16 Source: Undersecretariat of Treasury 94

95 Average ity of Borrowing Domestic Borrowing (months) Eurobond Issuance (years) * ** Euro Dollar Yen (*) As of January, 2017 (**) As of March, 2017 Source: Undersecretariat of Treasury 95

96 Duration of TL-Denominated Domestic Debt Stock* (Months) Dec.04 Dec.05 Dec.06 Dec.07 Dec.08 Dec.09 Dec. Dec.11 Dec.12 Dec.13 Dec.14 Dec.15 Dec.16 Jan.17 (*) Macaulay duration Source: Undersecretariat of Treasury 96

97 Duration of External Bond Stock* (Months) Dec.04 Dec.05 Dec.06 Dec.07 Dec.08 Dec.09 Dec. Dec.11 Dec.12 Dec.13 Dec.14 Dec.15 Dec.16 Jan.17 (*) Macaulay duration Source: Undersecretariat of Treasury 97

98 Time to Maturity of Cash Domestic Debt Stock (Months) Jan-17 Source: Undersecretariat of Treasury 98

99 Cost of External Borrowing (%) DOLLAR EURO * * (*) As of March, 2017 Source: Undersecretariat of Treasury

100 TRY Denominated Zero Coupon Borrowing Rates (Comp. Ann., %) J MSJ MSJ MSJ MSJ MSJ Source: Undersecretariat oftreasury Monthly Average Yearly Cumulative MSJ MSJ MSJ MSJ MSJ MSJ MSJ MSJ MSJ MSJ

101 Real Interest Rates (Comp. Ann., %) Real Interest Rate (.00) Note: - The real interest rates are calculated by using 12 months ahead CPI rates. Calculations are based on zero coupon Treasury auction results and Survey of Expectations of CBRT. - Before 2013, the calculations are only based on zero coupon bonds however, as of 2013 they re based on zero coupon bonds and 2-year fixed coupon bonds together. Source: CBRT, Undersecretariat of Treasury 1

102 Net Financing from IMF (Billion SDR) Source: Undersecretariat of Treasury 2

103 Credit Outstanding to IMF (Billion SDR) Source: Undersecretariat of Treasury 3

104 Treasury Guaranteed Debt Stock (Million USD) 12,000 11,000,000 9,000 8,000 7,000 6,000 5,000 4,000 Source: Treasury 12, Q3

105 Treasury Guaranteed Debt Stock Million USD 2016 Q3 PUBLIC 9,295 CENTRAL GOVERNMENT 300 LOCAL GOVERNMENTS 751 PUBLIC BANKS 7,412 SOEs 832 PRIVATE 3,180 BANKS 3,180 GENERAL TOTAL 12,474 Source: Treasury 5

106 The Ratio of Undertaken Treasury Guarantees to Total Guaranteed Payments (%) Jan.* * Annualized as of Jan Source: Treasury 6

107 Undertakings from Treasury Guarantees (Million USD) Local Administrations Local Adm.(Investment Guarantees) SOEs Other Jan Source: Treasury 7

108 The Stock of Treasury Receivables (Billion TL) Overdue Source: Undersecretariat of Treasury projected 8

109 The Stock of Treasury Receivables (January 2017) By Borrowers (%) By Source (%) Source: Undersecretariat of Treasury 9

110 Collections (Million TL) 7,000 6,000 5,000 4,000 5,249 3,000 3,084 1,872 2,000 1,000 2,188 1,970 1,503 1,561 2,053 3,198 1,794 2,641 1,937 2,606 2,446 2,492 1,118 1, Non-Cash Cash Source: Undersecretariat of Treasury 1

111 Gross External Debt Stock (Billion USD) Billion USD Q Q Q3 TOTAL 129,6 144,2 161,1 170,8 208,1 250,0 280,9 268,8 291,8 303,8 339,6 390,1 402,1 397,7 411,8 421,9 416,7 SHORT TERM 16,4 23,0 32,2 38,9 42,9 43,1 52,5 49,0 77,2 81,6 0,2 130,3 131,6 2,4 6,7 7,5 3,3 LONG TERM 113,2 121,2 128,9 131,8 165,3 206,9 228,4 219,9 214,6 222,3 239,5 259,8 270,5 295,3 305,2 314,4 313,4 PUBLIC SECTOR 64,5 70,8 75,7 70,4 71,6 73,5 78,3 83,5 89,1 94,3 4,0 115,9 117,7 113,4 118,7 122,0 122,1 SHORT TERM 0,9 1,3 1,8 2,1 1,8 2,2 3,2 3,6 4,3 7,0 11,0 17,6 17,9 14,6 17,6 16,5 17,1 LONG TERM 63,6 69,5 73,8 68,3 69,8 71,4 75,1 79,9 84,8 87,3 93,0 98,3 99,8 98,8 1,1 5,5 5,0 CBRT 22,0 24,4 21,4 15,4 15,7 15,8 14,1 13,2 11,6 9,3 7,1 5,2 2,5 1,3 1,3 1,2 1,0 SHORT TERM 1,7 2,9 3,3 2,8 2,6 2,3 1,9 1,8 1,6 1,2 1,0 0,8 0,3 0,2 0,2 0,2 0,1 LONG TERM 20,3 21,5 18,1 12,7 13,1 13,5 12,2 11,4,0 8,1 6,1 4,4 2,1 1,2 1,1 1,0 0,8 PRIVATE SECTOR 43,1 49,0 64,1 84,9 120,8 160,7 188,5 172,2 191,1 200,2 228,5 268,9 281,9 283,0 291,8 298,8 293,7 SHORT TERM 13,9 18,8 27,1 34,0 38,5 38,7 47,4 43,6 71,4 73,3 88,1 111,9 113,4 87,6 88,9 90,9 86,1 LONG TERM 29,2 30,1 37,0 50,9 82,3 122,0 141,1 128,5 119,7 126,9 140,4 157,1 168,5 195,4 202,9 207,9 207,6 Source: Undersecretariat of Treasury, CBRT 111

112 Gross External Debt Stock / GDP (%) (r) Q Q Q3 (r): Due to the revision on Gross Domestic Product calculation in accordance with the European System of Accounts (ESA-20) by TURKSTAT, ratios are revised. Source: Undersecretariat of Treasury, CBRT 112

113 Turkey s Net External Debt (% of GDP) (r) Q Q Q3 (r): Due to the revision on Gross Domestic Product calculation in accordance with the European System of Accounts (ESA-20) by TURKSTAT, ratios are revised. Source: Undersecretariat of Treasury, CBRT 113

114 External Debt Ratios (%) % Q Q Q3 GROSS EXTERNAL DEBT STOCK / GDP (r) PRIVATE SECTOR GROSS EXTERNAL DEBT STOCK / GDP (r) GROSS EXTERNAL DEBT STOCK / EXPORT (FOB) (*) PRIVATE SECTOR GROSS EXTERNAL DEBT STOCK / EXPORT (FOB) (*) CBRT RESERVES (GROSS) / GROSS EXTERNAL DEBT STOCK (**) CBRT RESERVES (GROSS) / SHORT TERM GROSS EXTERNAL DEBT STOCK (**) Source: Undersecretariat of Treasury, CBRT (*) Source for export data is CBRT's Balance of Payments Statistics, October (**) Source for reserves data is CBRT's International Investment Position Statistics, October r): Due to the revision on Gross Domestic Product calculation in accordance with the European System of Accounts (ESA-20) by TURKSTAT, ratios are revised. 114

115 FINANCIAL SECTOR 115

116 Banking Sector: Capital Adequacy Ratio (%) Source: BRSA 116

117 Banking Sector: Capital Adequacy Ratio (%) Target Rate 12 percent Operational risk included Legal Limit 8 percent Source: BRSA 117

118 Banking Sector: Capital Adequacy Ratio in Selected Emerging Markets (%, 2016Q3*) Indonesia Romania Thailand Colombia Poland Malaysia Brazil Hungary Czech Rep. Mexican Turkey Korea China India Chile Russia Source: IMF-FSI, BRSA * Quarter-end figures or latest available. 118

119 Banking Sector: Free Capital*/ Equity (%) (*) Free Capital = Total Equity (Fixed Assets + Affiliates, Subsidiaries and Joint Ventures) Source: BRSA 119

120 Banking Sector: Return on Equity (%) Source: BRSA 120

121 Banking Sector: Loans to Assets (%) Source: BRSA 121

122 Banking Sector: FX Position (Million USD) , , , * (*) As of February 24, Source: BRSA 122

123 Banking Sector: Asset Quality (NPL Ratio, %) Gr oss Net Source: BRSA 123

124 Firms Total Debt / Shareholder s Equity and Interest Coverage* (Earnings Before Interest and Tax / Interest Expenses) Ratios (%) Total Debt / Shareholder's Equity Interest Coverage Ratio (*) Provisional Statistics Sorce: CBRT Company Accounts 124

125 Household Liabilities (% of GDP) Turkey Euro Area Source: CBRT, ECB 125

126 0 Total Housing Loans (% of GDP) UK US Euro Zone Turkey* Source: FED, ECB, Eurostat, Bank of England, UK National Statistics, CBRT, TURKSTAT, BRSA, HDAT (*) Total housing loans for 20 comprises of housing credits extended by banks and consumer finance companies as well as Household liabilities to HDAT due to HDAT s housing sales with long term maturity. 126

127 MARKET INDICATORS 127

128 Foreign Exchange Rates (TL/USD) Source: CBRT Jan-03 Apr-03 Aug-03 Dec-03 Mar-04 Jul-04 Nov-04 Mar-05 Jun-05 Oct-05 Feb-06 May-06 Sep-06 Jan-07 May-07 Aug-07 Dec-07 Apr-08 Jul-08 Nov-08 Mar-09 Jul-09 Oct-09 Feb- Jun- Sep- Jan-11 May-11 Aug-11 Dec-11 Apr-12 Aug-12 Nov-12 Mar-13 Jul-13 Oct-13 Feb-14 Jun-14 Oct-14 Jan-15 May-15 Sep-15 Dec-15 Apr-16 Aug-16 Dec-16 Mar-17

129 Interest Rates (%) Domestic Debt Securities Secondary Market Rates Source: Undersecretariat of Treasury 129 Jan-03 Apr-03 Aug-03 Dec-03 Mar-04 Jul-04 Nov-04 Mar-05 Jun-05 Oct-05 Feb-06 May-06 Sep-06 Jan-07 May-07 Aug-07 Dec-07 Apr-08 Jul-08 Nov-08 Mar-09 Jul-09 Oct-09 Feb- Jun- Sep- Jan-11 May-11 Aug-11 Dec-11 Apr-12 Aug-12 Nov-12 Mar-13 Jul-13 Oct-13 Feb-14 Jun-14 Oct-14 Jan-15 May-15 Sep-15 Dec-15 Apr-16 Aug-16 Dec-16 Mar-17

130 BIST 0 Index 0,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 0,000 Jan-03 Apr-03 Aug-03 Dec-03 Mar-04 Jul-04 Nov-04 Mar-05 Jun-05 Oct-05 Feb-06 May-06 Sep-06 Jan-07 May-07 Aug-07 Dec-07 Apr-08 Jul-08 Nov-08 Mar-09 Jul-09 Oct-09 Feb- Jun- Sep- Jan-11 May-11 Aug-11 Dec-11 Apr-12 Aug-12 Nov-12 Mar-13 Jul-13 Oct-13 Feb-14 Jun-14 Oct-14 Jan-15 May-15 Sep-15 Dec-15 Apr-16 Aug-16 Dec-16 Mar-17 Source: Borsa Istanbul

131 Spreads on Turkey s External Debt (bp) (EMBI+ Turkey) - (EMBI+) EMBI+ EMBI+ Turkey Source: JP Morgan 131 J-03 J-03 J-04 J-04 F-05 A-05 F-06 A-06 M-07 S-07 M-08 O-08 A-09 O-09 A- N- M-11 N-11 J-12 D-12 J-13 D-13 J-14 J-15 J-15 J-16 A-16 F-17

132 Secondary Market and CBRT Policy Rate Jan-05 Apr-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Nov-07 Feb-08 May-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb- May- Jul- Oct- Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Compounded Interest Rates (%) Secondary Market Rates CBRT Policy Rates Source: CBRT, Treasury 132

133 Credit Rating Standard & Poor s Credit Rating Source: Bloomberg Jan-05 Jun-05 Nov-05 Apr-06 Sep-06 Feb-07 Jul-07 Dec-07 May-08 Oct-08 Mar-09 Aug-09 Jan- Jun- Nov- Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 N S P BB- N S P B N S P B- N S P BB N S P BB+ N S P B+

134 Rating Map (as of 6 Mart, 2017) Moody's Standard & Poor's Fitch A2 Botswana, Poland, Slovakia A Slovenia A Malta, Ireland Bermuda A3 Malta, Mexico, Peru, Lithuania, Latvia A- Botswana, Lithuania, Latvia, Saudi Arabia A- Poland, Latvia, Lithuania Iceland, Ireland Trianidad & Tobago, Malta, Iceland Slovenia Baa1 Thailand, Mauritius BBB+ Thailand, Poland, Peru BBB+ Thailand, Italy, Mexico Oman Mexico, Spain Peru, Spain, Iceland Baa2 Bulgaria, Italy, Panama BBB Panama BBB Kazakhstan, Oman, Panama Spain, Uruguay, Colombia Colombia, Philippines, Uruguay Colombia South Africa, Philippines Baa3 Namibia, India, Slovenia BBB- Morocco, India, Kazakhstan BBB- Morocco, Namibia, India, Romania Romania, Trianidad & Tobago Romania, South Africa Indonesia, Philippines, Bulgaria Indonesia, Kazakhstan, Bahamas, Hungary Italy, Hungary, Oman Uruguay, Russia, South Africa, Hungary Ba1 Turkey (stable), Morocco, Albania BB+ Indonesia, Bahamas BB+ Turkey (stable), Azerbaijan, Bahrain Guatemala, Portugal Bulgaria, Russia Russia, Paraguay, Azerbaijan Portugal, Azerbaijan Ba2 Brazil, Croatia, Bahrain BB Turkey (negative), Guatemala BB Costa Rica, Guatemala, Croatia, Brazil Costa Rica Crotia, Brazil, Cyprus Ba3 Bangladesh, Georgia, Bolivia BB- Bangladesh, Georgia, Vietnam, Bahrain BB- Georgia, Suriname, Bolivia Tunisia Paraguay, Bolivia, Montenegro, Jordan Vietnam, Bangladesh, Cyprus, Costa Rica, Dominican Republic Dominican Republic B1 Senegal, Sri Lanka, Jordan, Montenegro, Suriname B+ Senegal, Sri Lanka, Fiji B+ Sri Lanka, Rwanda Dominican Republic, Fiji, Cyprus Papua New Guinea Tunisia St Vincent/Grenadine, Vietnam, Angola Honduras, Albania, Suriname B2 Cambodia, Lebanon, Nicaragua B Bosnia Herzegovina, Cambodia, Jamaica, Pakistan B Ecuador, Egypt, Jamaica Papua New Guinea, Honduras, Rwanda Tunisia, Ecuador, Angola, Rwanda Argentina, Angola, El Salvador B3 Moldova, Egypt, Pakistan, Argentina, Jamaica B- Belarus, Lebanon, Mongolia, El Salvador B- Lebanon, Ukraine, Mongolia Bosnia Herzegovina, Ecuador, El Salvador Egypt, Ukraine, Greece, Argentina Suriname Caa1 Belarus, Barbados, Mongolia CCC+ Barbados CCC+ Caa2 Belize, Cuba CCC Venezuela CCC Venezuela, Greece Caa3 Venezuela, Greece, Ukraine CCC- CCC- Ca CC Belize CC C C C SD DDD D/RD Source: Bloomberg 134

135 EMBI+ Index: Comparison with Other Countries Change (bp) ( ) Phillipines -125 Russia Colombia Argentina S. Africa Mexico Brazil EMBI+ Turkey Ukraine 352 Venezuela Source: Bloomberg 135

136 Equity Markets (Emerging and Mature Markets) % Change ( ) Chech Rep. -51,6 Japan China Brazil Poland S. Korea Malaysia Hungary India Russia USA (DJI) Turkey Mexico S. Africa -46,1-38,8 6,3 6,8 12,3 19,9 28,2 41,7 51, ,2 76, Source: Bloomberg 136

137 Currency Markets (Against USD) % Change ( ) China 5,4 Japan -3,8 S. Korea Malaysia Euro Czech Rep. -23,6-34,4-38,9-42,3 Poland Hungary India Brazil Mexico S. Africa -65,4-69,2-69,3-75,9-79,3-91,4 Russia -138,2 Turkey -218, Source: Bloomberg 137

138 INVESTMENT ENVIRONMENT 138

139 Starting a Business (Number of Procedures) Thailand Bulgaria Hungary Poland OECD South Africa Europe&Central Asia Turkey Croatia Mexico Czech Rep. India Brazil China Source: World Bank Doing Business Report,

140 Starting a Business (Duration, Days) Hungary Turkey Mexico Croatia OECD Europe& Central Asia Russia Bulgaria South Africa Czech Republic India Thailand Poland China Source: World Bank Doing Business Report,

141 Starting a Business (Cost, % of GDP Per Capita) Mexico 19.7 Poland 14.3 Turkey 12.7 Croatia Hungary Czech Rep Europe&Central Asia Thailand Brazil OECD China Russia Bulgaria Source: World Bank Doing Business Report,

142 Taxes on Income and Profit (% of GDP, 2012) Mexico Slovak Republic Turkey Poland* Hungary Estonia Slovenia Czech Republic Korea Chile Greece Portugal Japan Israel Spain Netherlands* France Germany OECD* United States Ireland United Kingdom Austria Switzerland Luxembourg Canada Italy Finland Sweden Australia* Belgium Iceland New Zealand Norway Denmark Source: OECD Factbook 2014 (*) 2011 Data 142

143 Tax Revenue Comparisons (% of GDP, 2011) Total Tax Revenue Income Taxes Taxes on Goods and Services Turkey OECD Comparative Group* (*) Includes Mexico, Korea, Czech Rep., Greece, Hungary, Ireland, Poland, Portugal, Slovak Rep. and Spain. Source: OECD, Factbook

144 RELATIONS with the IMF and EU 144

145 Relations with the IMF Arrangements 17th Stand-By Arrangement 18th Stand-by Arrangement 19th Stand-by Arrangement Duration Amount Approved (Million SDR) Amount Drawn (Million SDR) Repurchases (Million SDR) Projected Payments (Million SDR) ( ) 15,038 11,739 11,739 0 ( ) 12,821 11,914 11,914 0 ( ) 6,662 6,662 6,662 0 TOTAL 34,522 30,315 30,315 0 Source: Undersecretariat of Treasury 145

146 EU Accession Process I. Screening process: 3 October October 2006 II. Accession Talks : For 1 Chapter 1- Science and Research For 12 Chapters 1- Enterprise and Industrial Policy,2- Statistics, 3- Financial Control, 4- Consumer and Health Protection, 5- Trans-European Networks, 6- Company Law (fulfillment of opening benchmarks), 7-Intellectual Property Law (fulfillment of opening benchmarks) 8- Free Movement of Capital 9- Information Society & Media -Taxation, 11- Environment, 12- Food Safety, Veterinary & Phytosanitary Policy Negotiations were opened and provisionally closed Negotiations were opened provisionally but closing benchmarks For 2 Chapters 1- Education and Culture, 2- Economic and Monetary Policy For 8 Chapters Remaining chapters Submission of our Position Papers Opening benchmarks Awaiting for the screening reports 146

147 SOCIAL SECURITY 147

148 Social Security Reform Main Features Uniform norm and standards for workers, civil servants and the self employed. Gradual increase in retirement age to 65. Decrease in accrual rate to 2 %. The valorization of past earnings by CPI+30 % of GDP real growth Indexation of pensions by CPI. Universal health insurance (Covering entire population). Introduction of copayments for health care. Global budget in some health expenditures. 148

149 Decreasing Pension System Deficits ( ,% of GDP) Before the Reform After the Reform Source: World Bank,

150 Budget Transfers to Social Security Institution* (% of GDP) MTP 2017 MTP 2018 MTP *Deficit Financing, State Contribution, Billed Payments, Employment Incentives, General Health Insurance Premiums for Poor, Compensation for Tax Debate, Additional Allowance MTP: Medium-Term Program Source: SSI, Undersecretariat of Treasury 150

151 Net Pension Replacement Rates (2014) Low Income Earner* South Africa Mexico Chile Japan Germany Poland United States Slovenia Switzerland Canada Sweden Belgium Korea Finland Greece France United Kingdom Ireland OECD Average Estonia Russia Norway New Zealand Israel Italy Slovak Republic Australia Portugal Spain Hungary Iceland Austria Czech Republic Turkey China Luxembourg Netherlands Denmark Brazil South Africa Mexico Chile United Kingdom Japan Ireland Canada New Zealand United States Korea Switzerland Germany Poland Greece Australia Slovenia Estonia Norway Belgium OECD Average Finland Sweden Czech Republic Israel Denmark Brazil France Iceland China Italy Russia Slovak Republic Luxembourg Portugal Spain Hungary Austria Netherlands Turkey Average Income Earner Net Pension Replacement Rate: The individual net pension entitlement divided by net pre-retirement earnings (OECD) * The Half of Average Income Source:OECD, Pensions at a Glance,

152 Minimum Retirement Age for Men* (2014) *Current retirement age for men who entered the labour force at age of 20 Source: OECD, Pensions at a Glance,

153 Minimum Retirement Age for Women* (2014) * Current retirement age for women who entered the labour force at age of 20 Source: OECD, Pensions at a Glance,

154 Expected Years in Retirement for Men (2014) Source: OECD, Pensions at a Glance,

155 Expected Years in Retirement for Women (2014) Source: OECD, Pensions at a Glance,

156 LABOR MARKET 156

157 Labor Market Reform Increasing Flexibility of Labor Market Allowing for temporary employment relationship via private employment offices and off-site working. Part-time workers will be eligible for retirement benefits by paying the premium due for remaining working hours as to restore full premium payments for regular working hours. Part-time workers are covered by Unemployment Insurance Fund as regular workers. The linkage between social assistance and employment Cash transfers from Social Assistance and Solidarity Promotion Fund will be cut off for a year in case beneficiaries do not accept Turkish Labor Agency s job offers, vocational trainings or active labor force programs in a third row. Giving premium incentive to employers who employ social assistance recipients. Active labor market programs The budget allocation for active labor market programs is raised from 30% to 50% of previous year s premium income of The Unemployment Insurance Fund. Reduction of labor cost 5 percentage points of social security premium of the employers share are paid by the Government as an incentive. Employers are allowed to benefit from the above mentioned incentive concomitantly with other premium incentives. Employers share of social security premium for newly employed young and female workers is paid by Unemployment Insurance Fund provided both employers and employees meet defined conditions. The coverage of short-term working allowance is extended to sectoral and regional crises together with general economic crises. Daily short-term working allowance that was 40% of daily average gross income is increased to 60%. Obligation to employ ex-convicts is abolished. Sports facility, kindergarden, health and security unit s requirements under the Labor Law are eased. Employers share of social security premium for disabled workers is paid by the Government. 157

158 Tax Wedge on Employment (2015) *Single person at 0% of average earnings, no child Source: OECD Taxing Wages, United States United Kingdom Switzerland Korea Israel Mexico New Zealand Chile Belgium Austria Germany Hungary Italy France Finland Czech Rep. Sweden Slovenia Portugal Slovak Rep. Spain Greece Estonia Turkey Luxembourg Denmark Norway Netherlands OECD Average Poland İceland Japan Canada

159 Tax Wedge Distribution (2015) (*) Single without children at the income level of average worker (Share of total cost) Source: OECD Taxing Wages

160 Social Security Contributions (% of GDP) OECD Turkey Canada Czech Republic Source: OECD Statistics Database,

161 Number of Active Insured (Million) *As of May Source: Social Security Institutions, Montly Statistical Bulletin May

162 Social Security Coverage (Million) (Employees and Dependents) *As of May Source: Social Security Institutions, Montly Statistical Bulletin May

163 Labor Indicators by Regions (2015) Regions Population 15 years and over Labour force Employed Unemployed Labour force participation rate (%) Unemployment rate (%) Employment rate (%) Not in labour force Türkiye Geneli TR (İstanbul) TR21 (Tekirdağ, Edirne, Kırklareli) TR22 (Balıkesir, Çanakkale) TR31 (İzmir) TR32 (Aydın, Denizli, Muğla) TR33 (Manisa, Afyon, Kütahya, Uşak) TR41 (Bursa, Eskişehir, Bilecik) TR42 (Kocaeli, Sakarya, Düzce, Bolu, Yalova) TR51 (Ankara) TR52 (Konya, Karaman) TR61 (Antalya, Isparta, Burdur) TR62 (Adana, Mersin) Van TR63 (Hatay, Kahramanmaraş, Osmaniye) TR71 (Kırıkkale, Aksaray, Niğde, Nevşehir, Kırşehir ) TR72 (Kayseri, Sivas, Yozgat) TR81 (Zonguldak, Karabük, Bartın) TR82 (Kastamonu, Çankırı, Sinop) TR83 (Samsun, Tokat, Çorum, Amasya) TR90 (Trabzon, Ordu, Giresun, Rize, Artvin, Gümüşhane) TRA1 (Erzurum, Erzincan, Bayburt) TRA2 (Ağrı, Kars, Iğdır, Ardahan) TRB1 (Malatya, Elazığ, Bingöl, Tunceli) TRB2 (Van, Muş, Bitlis, Hakkari) TRC1 (Gaziantep, Adıyaman, Kilis) TRC2 (Şanlıurfa, Diyarbakır) TRC3 (Mardin, Batman, Şırnak, Siirt) Source: TURKSTAT,

164 Distribution of Employment by Economic Activity (2013) Countries Agriculture Industry Services Turkey Mexico Poland Korea Brasil Spain Italy Japan Czech Rep Canada United Kingdom Germany Source: OECD, Labor Force Statistics Database,

165 Restrictiveness of Protection Legislation on Temporary Employment (Index Scale of 0-6 from Least to Most Restrictive) 4.88 OECD Avg Canada USA UK Slovak Rep. Ireland Australia Switzerland Czech Rep. Hungary Netherlands Japan N. Zeland Denmark Austria Sweden Korea Germany Spain Poland EU-19 Finland Italy Belgium Portugal Norvey Greece France Mexico Luxembourg Turkey Source: OECD Labour Force Statistics Database,

166 Part-time Employment (%, 2015) Source: OECD, Labor Force Statistics Database 166

167 Severance Payments Burden (2016) (As weeks of Payment for Years Work) Source: World Bank, Doing Business in