Euromoney Eurasia Conference

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Text of Euromoney Eurasia Conference

PowerPoint Sunusu

Turkeys Economic & Political Outlook

June 3, 2014

Mehmet imek

Minister of Finance

1

Is political stability at stake?

Low growth the new normal?

Is the pick-up in inflation temporary?

Turkeys soft spot - getting fixed?

Questions of Interest

2

Is political stability at stake?

3

Importance of Political Stability

4

v

A Virtuous Cycle

Political Stability

5

15 Months

139 Months

0

20

40

60

80

100

120

140

Average Lifetime of Governments during 1950-2002 AK Party Governments Since 2002

1923-2002

Average Lifetime of

Governments: 17 months

2002-14

Political Stability

2023 Vision

Local Election Results

Source: Anadolu Agency

AK PARTY: Justice and Development Party

CHP: Republican Peoples Party

MHP: Nationalist Movement Party

BDP: Peace and Democracy Party

( %

)

38,8

23,1

16,1

5,7

16,3

45,5

27,8

15,2

4,2

7,3

0

5

10

15

20

25

30

35

40

45

50

AK PARTY CHP MHP BDP Others

2009

2014

6

Key Messages from the Ballot Box

Political Stability is here to stay

Corruption allegations were politically motivated

President is likely to be elected in the first round

7

2 More Elections Ahead

Presidential

August 2014

Parliamentary

June 2015

8

Low growth the new normal?

9

Real GDP

Source: Turkstat, Eurostat

120

100,0

85

90

95

100

105

110

115

120

Q1

-08

Q2

Q3

Q4

Q1

-09

Q2

Q3

Q4

Q1

-10

Q2

Q3

Q4

Q1

-11

Q2

Q3

Q4

Q1

-12

Q2

Q3

Q4

Q1

-13

Q2

Q3

Q4

Rea

l GD

P (

20

07

Q4

=1

00

, s.a

.)

10

Real GDP: Turkey vs AMs

Source: Turkstat, Eurostat

120

98

100,0

106

85

90

95

100

105

110

115

120

Q1

-08

Q2

Q3

Q4

Q1

-09

Q2

Q3

Q4

Q1

-10

Q2

Q3

Q4

Q1

-11

Q2

Q3

Q4

Q1

-12

Q2

Q3

Q4

Q1

-13

Q2

Q3

Q4

Rea

l GD

P (

20

07

Q4

=1

00

, s.a

.)

TURKEY

US

Euro Area

11

12

Real GDP: Turkey vs EMs

Source: TURKSTAT, IMF

168,8

100,0

152,8

153,0

180,4

159,0

143,8

95

105

115

125

135

145

155

165

175

185

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Turkey Emerging & Developing Europe

LatAm. & the Caribbean Developing Asia excl. China & India

Russia South Africa

TURKEY

Rea

l GD

P (

20

02

=10

0)

Upside

Stronger external demand

EU pulling out of recession

Arab Spring becoming less disruptive

TL depreciation

Downside

Tighter financial conditions

Geopolitical tensions

Growth Outlook

13

Softer Domestic Demand

14 Source: Turkstat, BRSA

(In

dex

) (A

nn

ua

l, %)

0

5

10

15

20

25

30

35

40

45

55

60

65

70

75

80

85Ja

n-0

8

Ap

r-0

8

Jul-

08

Oct

-08

Jan

-09

Ap

r-0

9

Jul-

09

Oct

-09

Jan

-10

Ap

r-1

0

Jul-

10

Oct

-10

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

Consumer Confidence Total Credit Growth (rhs)

15 Source: Bloomberg, Turkstat

Ind

ex (

mo

nth

ly)

(6 m

on

th ro

lling

)

20

22

24

26

28

30

32

34

36

30

35

40

45

50

55

60

65

Jan

-09

Ap

r-0

9

Jul-

09

Oct

-09

Jan

-10

Ap

r-1

0

Jul-

10

Oct

-10

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Eurozone Manufacturing PMI Turkey's Exports to Europe (rhs)

External Demand

Manufacturing Output

16 Source: Turkstat, CBT

100

80

85

90

95

100

105

110

115

120

125

130

55

60

65

70

75

80

85

90

95

100

105

110

115

120Ja

n-0

8

Ap

r-0

8

Jul-

08

Oct

-08

Jan

-09

Ap

r-0

9

Jul-

09

Oct

-09

Jan

-10

Ap

r-1

0

Jul-

10

Oct

-10

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

Real Sector Confidence Index (s.a.) Industrial Production (rhs) (s.a.)

PMI remaining above 50

17 Source: HSBC

51,1

30

35

40

45

50

55

60

Jan

-07

Ap

r-0

7

Jul-

07

Oct

-07

Jan

-08

Ap

r-0

8

Jul-

08

Oct

-08

Jan

-09

Ap

r-0

9

Jul-

09

Oct

-09

Jan

-10

Ap

r-1

0

Jul-

10

Oct

-10

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

Job Creation Em

plo

ymen

t (m

n p

eop

le s

.a.)

Source:TURKSTAT 18

25,8

20

21

22

23

24

25

26

27

Dec

-07

Mar

-08

Jun

-08

Sep

-08

Dec

-08

Mar

-09

Jun

-09

Sep

-09

Dec

-09

Mar

-10

Jun

-10

Sep

-10

Dec

-10

Mar

-11

Jun

-11

Sep

-11

Dec

-11

Mar

-12

Jun

-12

Sep

-12

Dec

-12

Mar

-13

Jun

-13

Sep

-13

Dec

-13

Unemployment & Labor Participation Rate

Source:TURKSTAT

44

45

46

47

48

49

50

51

52

8

9

10

11

12

13

14

15

16Ja

n-0

8

May

-08

Sep

-08

Jan

-09

May

-09

Sep

-09

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Jan

-13

May

-13

Sep

-13

Jan

-14

Unemployment Rate Labor Force Participation Rate (rhs)

(s.a., %

) (s.a

., %