TURKEY: RECENT DEVELOPMENTS January December 18
3 581 4 698 5 961 7 4 7 96 9 656 8 98 1 931 1 56 11 5 11 588 11 19 1 883 1 597 12 48 12 112 Per capita GDP tripled while nominal GDP quadrupled in last 15 years 237 311 44 549 Nominal GDP (bn USD) 872 829 762 769 675 643 9 934 858 862 849 275 2 2 175 1 Real GDP Growth (Index: 2=) Avg. GDP Growth (3-17) 5,8% Poland 3,9% Romania 3,9% Czechia 2,9% Hungary 1,9% 1 2 5 8 11 14 17 2 5 8 11 14 17 23 Per capita GDP (usd) Avg. Real GDP Growth (%) 6,6 4,3 3,1 2 5 8 11 14 17 1999-4 5-1 11-17 Source: Turkstat, CBRT, IMF 2
Favourable Demographics: Half of population under age TURKEY 8-84 7-74 6-64 -54 4-44 -34-24 1-14 -4 -,5 -,3 -,1,1,3,5 Females Males EUROPE + 9-94 8-84 7-74 6-64 -54 4-44 -34-24 1-14 -4 -,5 -,3 -,1,1,3,5 Males Females 1 115 Working Age Population (15-64) (Index: 14=) 75 7 Total Dependency Ratio (%, Age: -14 & >64 / Age: 15-64) Europe 11 65 15 6 95 9 85 Europe 14 16 18 22 24 26 28 32 34 55 45 14 16 18 22 24 26 28 32 34 Source: Turkstat, Eurostat, UN 3
High potential with young population and improving workforce Employment (mio) 26 27 27 28 28 21 21 22 23 24 17-18 avg. ~1.k 6 7 8 9 1 11 12 13 14 15 16 17 18 - Nov Unemployment rate (%) Labor Participation Rate (%) 6,5 51,3 52, 52,8 53, 44,5 44,3 44,9 45,7 46,5 47,4 47,6 48,3 15 4 13,1 12,3 11,1 1,9 1,9 1, 9,9 1,3 1 9, 9,2 9,1 8,4 9, 6-16 avg. 688k New job creation between 17-18 is nearly 1,5x of previous 1 year average. 5 6 7 8 9 1 11 12 13 14 15 16 1718 - Nov Source: Turkstat 4
Strong fiscal discipline has been the main pillar of economic policy Budget Deficit (%GDP) 3,5 Maastricht criterion: 3% 1,3 1,9 1, 1,1 1, 1,1 1,5 2, 1 11 12 13 14 15 16 17 18 * Latest figure: September 18 12 Peers' Budget Deficit (%GDP) General Government Debt Stock (%GDP) 9 83,8 86,1 89,4 91,3 91,8 89,9 88,9 86,6 84,4 Eurozone 6 3 7,3 5,3 4,8 5,2 4,9 5,2 4,2 4,7 3,7 4,1 3,5 2,4 2,4 2,5 2,9 9,5 9, 8,5 3,8 4,1 4,4 2,6 2,5 1,7 1 11 12 13 14 15 16 17 Brazil S. Africa Poland Maastricht criterion 4,1 36,5 32,7 31,4 28,8 27,6 28,3 28,5 32,3 1 11 12 13 14 15 16 17 18E Eurozone Source: Bloomberg, IMF 5
Decreasing trade gap with diversified export markets 's Share in World Total Export Exports (% of total),9%,9%,9% 1,% 1,% 1,% 1,% 46 39 42 43 44 48 47,8% 21 28 23 22 22 22 23 18 11 12 13 14 15 16 17 18E 11 12 13 14 15 16 17 18 EU Near and Middle Eastern Trade Balance (bn USD, 12-month cumulative) Composition of Imports (%) 4 4 3 16 84 85 63 56 77 55 48 8 12,8% 18 1,5% 2 1 241 2 237 242 152 152 158 135 7 199 144 143 234 223 217 157 168 169-18,% 15,3% - 69,2% 74,3% 11 12 13 14 15 16 17 18 19-1 * Latest figure: January 19 Total Exports Total Imports Foreign Trade Gap Source: Bloomberg, Turkstat, WTO 6
Current account deficit is decreasing Current Account Deficit (% GDP) 9, 1,6% 1,4% 's Share in Global FDI Inflows 4,2 5,7 5,4 5,1 5,8 5,5 6,7 4,7 3,7 3,8 5,6 5,6 1,2% 1,%,8%,6%,8% 1,8 5 6 7 8 9 1 11 12 13 14 15 16 17 18 * Latest figure: Q3, 18,4%,2%,%,4% 4 5 6 7 8 9 1 11 12 13 14 15 16 17 35 15 1 5-5 -1 Portfolio Inflows (12-month cumulative, bn USD) -15 6 7 8 9 1 11 12 13 14 15 16 17 18 35 15 1 5 Foreign Direct Investment Inflows (12-month cumulative, bn USD) 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18 Equity Security Source: Bloomberg, CBRT, UNCTAD 7
J-16 A-16 J-16 O-16 J-17 A-17 J-17 O-17 J-18 A-18 J-18 O-18 J-19 Central bank is implementing tight monetary policy 27 24 21 18 15 12 9 6 CBRT INTEREST RATES (%) Interest Rate Corridor Overnight Lending Rate Overnight Borrowing Rate 1-week REPO Rate Late Liquidity Window Lending Rate CBRT Average Funding Rate - 5 day MA CBRT Funding Composition (billion TRY) 18 16 14 1 8 74 6 4 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 One Week Repo Late Liquidity Window Overnight Lending Net Open Market Operations 26 24 22 18 Annual CPI (%) 16 14 12 1 8 6 4 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 19,7 8, 7,6 7,2 6,8 6,4 6, 5,6 5,2 4,8 4,4 4, 3,6 3,2 May-17 Aug-17 Nov-17 Feb-18 May-18 Aug-18 Nov-18 Feb-19 USD/TRY Basket (.5 EUR &.5USD) EUR/TRY Source: Bloomberg, CBRT 8
Argentina Indonesia Mexico Hungary Brazil Russia Canada Czech Rep. China Poland Portugal Ireland Netherlands Spain Belgium Austria UK USA France Germany Italy Japan Greece India Argentina Canada Mexico Hungary Czech Rep. Indonesia Brazil China Netherlands Russia Belgium Spain Portugal Poland Austria UK France Germany Ireland Japan Italy USA Greece India Ireland Indonesia Netherlands UK Germany Belgium France Poland Austria Brazil Czech Rep. Hungary Japan Greece Italy India Mexico Spain Portugal Canada USA Argentina China Russia Canada USA Japan UK Germany China Netherlands Czech Rep. Austria Mexico Belgium Indonesia Argentina France Hungary Brazil Spain Poland Ireland Italy India Russia Portugal Greece Well capitalized, strong banking sector attracts foreign interest 15 1 5 23 22 Capital Adequacy Ratio (CAR) (%) 19 19 18 18 18 18 18 17 17 17 16 16 16 16 15 15 15 15 14 14 12 45 4 35 15 1 5 Non-performing Loans to Total Gross Loans (NPL) (%) 1 1 1 2 2 2 2 2 2 2 2 2 3 3 3 4 4 4 8 1 1 11 11 44 6 5 5,2 Return on Assets (ROA) (%) 4 45 Return on Equity (ROE) (%) 4 3 2 1 2,5 2,2 2, 1,9 1,7 1,4 1,2 1,1 1,,8,8,8,8,7,6,6,5,4,4,4,3,2 1 22 21 18 18 17 15 14 13 11 9 9 9 9 8 8 7 6 6 5 4 4-1 -,1-,1-1 -1-2 Source: IMF FSI Latest Available Data for Each Country by March 19. data acquired from BRSA. 9
The banking sector grew as a result of its strong asset quality and was able to maintain high profits 6,4 4,99 3,9 3,62 3,82 5,57 3,8 2,78 2,95 2,83 2,94 3, 3,35 3,5 4,4 4, Non-Performing Loan Ratio (%) 4. 4. Banking Sector Total Asset (billion TL) 3.867 3.861 3. 3.8 3. 2. 2. 1. 1. 2.731 2.357 1.994 1.732 1.371 1.218 1.7 1 11 12 13 14 15 16 17 18 19 * Latest figure: Jan 19 * Latest figure: Jan 19 Capital Adequacy Ratio (%), Profitability Ratio (%) 19, 15,88 17,9 16, 14,28 14,75 16,6 16,9 17,3 17,1 16,3 15,3 15,6 15,6 12, 11,28 Target Rate of %12 8, Legal limit of %8 1 11 12 13 14 15 16 17 18 19 * Latest figure: Jan 19 4,, 1,16 1, 1,62 1,44 Dec-15 Dec-16 Dec-17 Dec-18 Net Income / Average Total Assets (%) Net Income / Average Shareholder's Equity (%) Source: BRSA 1
Tourism revenues and number of visitors doubled between 4-14. Strong recovery in 18! # of Foreign Visitors vs. Revenues Foreign Arriving Visitors Change (YoY,%) 6 17 17 21 19 19 23 21 26 27 29 31 31 28 29 34 32 36 36 34 31 22 32 26 39 4 - -4 4 6 8 1 12 14 16 18 Revenue (bn. USD) # of tourists (mio) * Latest figure: Q4-18 -6 7 8 9 1 11 12 13 14 15 16 17 18 * Latest figure: Jan 19 5, Direct Contribution to GDP* (%) Tourism Revenue* 4,5 4, 3,5 4 7 1 13 16 19 22 4 7 1 13 16 19 22 * Based on WTTC data Source: Turkstat, WTTC 11
Air traffic more than tripled in last 1 years Wide Body Range mio Passengers Carried () 2 21 Domestic SFO 181 International LAX 166 ORD YYZ YUL MIA IAD BOS MEX HAV PTY BOG ATL NRT KIX ICN PEK PVG JFK CCS CAN 174 149 Total 1 IAH 193 118 1 13 TPE MNL 45 HKG 56 62 7 79 86 SGN ISTANBUL HKT BKK KUL SIN CGK GRU EZE MPM JNB CPT TNR MRU DUR Narrow Body Range Narrow Body Range Capability to and from Istanbul (with full passenger payload) 1 out of 7 international destinations More than 4% of world-wide international traffic Over 6 national capitals All of Europe, Middle East, Central Asia and North and East Africa Source: Turkstat, Turkish Airlines Investor Presentation 12 As of 31.12.18 Note: Diameters of the bubbles are proportional to the number of passengers carried.
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