MINISTRY of ECONOMY ECONOMIC OUTLOOK APRIL 2013 Economic Outlook is revized in the 1st and the 3rd weeks of the month. Recent Update: 26/04/2013

MINISTRY of ECONOMYMINISTRY of ECONOMY

ECONOMIC OUTLOOK

APRIL 2013APRIL 2013

Economic Outlook is revized in the 1st and the 3rd weeks of the month.

Recent Update: 26/04/2013

A- MACROECONOMIC OUTLOOKA- MACROECONOMIC OUTLOOK

B- FOREIGN TRADE OUTLOOKB- FOREIGN TRADE OUTLOOK

1) MERCHANDISE1) MERCHANDISE

2) SERVICES2) SERVICES

C- INVESTMENTS , FOREIGN CAPITAL and INCENTIVESC- INVESTMENTS , FOREIGN CAPITAL and INCENTIVES

D- FREE ZONES in TURKEYD- FREE ZONES in TURKEY

E- BILATERAL, REGIONAL, PLURILATERAL and MULTILATERAL TRADEE- BILATERAL, REGIONAL, PLURILATERAL and MULTILATERAL TRADE

OUTLINEOUTLINE

AprilApril 201 20133 Ministry of Economy Ministry of Economy 22

A- MACROECONOMIC OUTLOOKA- MACROECONOMIC OUTLOOK


Growth Forecasts for Selected Countries/Country Groups (%)Growth Forecasts for Selected Countries/Country Groups (%)

According to the IMF, Turkish Economy is expected to grow by 3.4% and 3.7% in 2013 and 2014 respectively.

In the 2012, Turkish economy grew by 2.2%.

Source: IMF, OECD, UN, WB


Turkey Euro Area US Brazil Russia India China2013 3.4 -0.3 1.9 3.0 3.4 5.7 8.02014 3.7 1.1 3.0 4.0 3.8 6.2 8.22013 4.1 -0.1 2.0 4.0 3.8 5.9 8.52014 5.2 1.3 2.8 4.1 4.1 7.0 8.92013 4.0 0.7 2.4 4.2 4.2 6.9 8.12014 5.0 1.4 2.8 3.9 4.0 7.1 8.42013 3.2 -0.3 2.1 3.3 4.4 6.7 8.32014 5.4 0.9 2.3 4.5 4.4 7.2 8.5

IMF

OECD

WB

UN

Growth Forecasts for Selected Countries/Country Groups (%)

According to the IMF estimates, global trade of merchandise and services is expected to increase by 3.5% in 2013 and 5.3% in 2014 in real terms.

According to the WTO estimates, global trade volume of merchandise and services is expected to increase by 3.3% in 2013 and 5.0% in 2014 in real terms.

Forecasts for Merchandise and Services Trade Growth (%)Forecasts for Merchandise and Services Trade Growth (%)

Source: IMF and WTO


YearsAdvanced Economies

Emerging Markets

Advanced Economies

Emerging Markets

2013 2.8 4.8 2.2 6.2 3.52014 4.6 6.5 4.1 7.3 5.32013 1.4 5.3 1.4 5.9 3.32014 2.6 7.5 3.2 7.4 5.0WTO

Forecasts for Merchandise and Services Trade Growth (%)Exports Imports World

Trade Volume

IMF

Economic Targets of 201Economic Targets of 20133-201-20155 Medium Term Programme Medium Term Programme

*Forecast (Medium Term Programme, Ministry of Development – October 9, 2012)

Medium Term Programme which covers 2013-2015 period aims to strengthen macroeconomic and financial stability by reaching potential economic growth rate, decreasing the current account deficit further, reducing inflation and improving public fiscal balances.


2013* 2014* 2015*GDP (Billion $, Current Prices) 858 919 998GDP Per Capita ($) 11,318 11,982 12,859Real GDP Growth 4.0 5.0 5.0Unemployment Rate (%) 8.9 8.8 8.7Tourism Income (Billion $) 25.4 27.0 28.4Current Account Balance (Billion $) -60.7 -63.6 -64.7Current Account Balance / GDP (%) -7.1 -6.9 -6.5

Real GDP Growth of Selected Countries/Country Groups (2012)Real GDP Growth of Selected Countries/Country Groups (2012)

Turkish Economy expanded by 2.2% in 2012.

Source: TURKSTAT, IMF, EuroStat, IBGE,


Euro Area

Annual Economic Growth Rates (2002-2012)Annual Economic Growth Rates (2002-2012)

* Forecast, Medium Term Programme Source:TURKSTAT

Turkey has recovered fast from the global financial crisis and amongst those countries affected less from current global economic uncertainties.

Mean annual growth rate between 2002 and 2012 was 5.2%. Real GDP growth for 2012 realized as 2.2%.


GDP Per CapitaGDP Per Capita

Source: Dollar value is from TURKSTAT, PPP GNI value from World Bank

Since 2002 GDP per capita has tripled from 3,492 USD to 10,504 USD. According to Purchasing Power Parity (PPP, current international $), GNI per capita surpassed 17 thousand international dollar which has the same purchasing power over GNI as a U.S. dollar has in the United States.


Capacity Utilization Ratio (%)Capacity Utilization Ratio (%)

Source: TURKSTAT

Capacity utilization ratio realized as 73.6 % in April 2013.


Industrial Production IndexIndustrial Production Index

Source: TURKSTAT

Industrial production index increased by 1.59 % year-over-year in February 2013 up to 104.5 (2010=100).


Inflation (Annual Percent Change)Inflation (Annual Percent Change)

Annual inflation in 2012 realized as 6.16%. Inflation was 7.29% in March 2013.

Source: TURKSTAT


Real Effective Foreign Exchange Rate (2003=100)Real Effective Foreign Exchange Rate (2003=100)

As of March 2013, Turkish Lira has appreciated by 0.23% and 0.57% monthly in terms of the CPI-based and PPI- based eal effective exchange rate respectively.

Source: CBRT

April 2013April 2013 Ministry of EconomyMinistry of Economy 1313

Total Credits and Consumer Credits (Billion TL)Total Credits and Consumer Credits (Billion TL)

Credits and specifically consumer credits increased in parallel to the growing domestic demand.

Total credits increased %3.21 on a monthly basis in March 2013.

April 2013 April 2013 Ministry of EconomyMinistry of Economy 1414

Source: BRSA

CDS Premiums (Apr. 25th, 2013)CDS Premiums (Apr. 25th, 2013)

Source: DB Research* Higher CDS premiums indicate higher risk levels.

CDS premium of Turkey is significantly low compared to most of the European countries.


Financial MarketsFinancial Markets

Comparing to previous year, total assets of the banking sector increased by 14.41% and reached 1.397 trillion TL in February 2013.

Capital Adequacy Ratio of Turkish Banking Sector is 17.63% in February 2013.


Source: BRSA

Data on Banking Sector 2012 February 2013 FebruaryNumber of Banks 48 49Number of Domestic Branches 10,483 11,110Number of Foreign Branches 77 80Number of Total Personnel Employed 194,486 201,302Total Assets (Million TL) 1,221,097 1,397,069Total Equities (Million TL) 151,629 186,455Net Profit or Loss (Million TL) 3,445 4,318Nonperforming Loans (Gross) / Cash and Cash Equivalents (%) 2.78 2.95Net Profit or Loss / Average Equities (%) 0.28 0.31Liquid Assets with 12 Months of Maturity / Total Assets (%) 71 72Capital Adequacy Ratio (%) 17 18

EU Defined Budget Deficit/ GDP (%)EU Defined Budget Deficit/ GDP (%)

EU defined general government budget deficit/GDP ratio was 2.6% in Turkey in 2011 and Turkey satisfied the Maastricht criteria of 3%. Turkey also outperformed 18 EU Countries.

Central government budget deficit/GDP ratio was 2.0% in Turkey in 2012. In January-March 2013 period, central government budget deficit was 897

million Turkish Liras.

* 2011


Government Debt / GDP (%)Government Debt / GDP (%)

Debt/GDP ratio of Turkey was 36.1% in 2012, which was below the level in 24 EU Countries and the Maastricht Criteria (60%).


Unemployment Rates (%)Unemployment Rates (%)

In January 2013, the unemployment rate was 10.6%. Seasonally adjusted unemployment rate was 9.4%.

Seasonally adjusted unemployment rate in Euro Area was 12.0% and 10.9% in (EU27) in February 2013. In terms of unemployment ratio Turkey outperformed 15 EU countries according to current data.

After Russia, Germany, England and France, Turkey has the 5th largest labor force among the European countries. (2011, World Bank)

Source: TURKSTAT

April 2013April 2013 Ministry of Economy Ministry of Economy 1919

Potential of Population (2011)Potential of Population (2011)

Source: World Bank (2011), TURKSTAT (2012)

Turkey has a population of 75.6 million in which half of the population is under the age of 30.1.

Growth rate of population is 1.2% in Turkey, 0.3% in EU Countries and -0.1% in Germany.

2020April 2013 April 2013 Ministry of EconomyMinistry of Economy

Cell phone penetration rate in households: 93.2% (2012) Internet access rate in households: 47.2% (2012) Internet access rate in enterprises: 92.5% (2012) PC penetration rate in households: 31.8% (2012) Laptop penetration rate in households: 27.1% (2012) Digital camera penetration rate in households: 27.1%

(2012) Printer penetration rate in households: 14.0% (2011) 1 of each 5 people owns a vehicle. (2011)

Growing Dynamism in Turkey's Domestic MarketGrowing Dynamism in Turkey's Domestic Market


B- FOREIGN TRADE OUTLOOKB- FOREIGN TRADE OUTLOOK


I) MERCHANDISEI) MERCHANDISE


Targets in Merchandise TradeTargets in Merchandise Trade

* Actual (Source: TURKSTAT)**Forecast: Medium Term Programme, Ministry of Development- 10/09/2012)


(Billion $) 2011* 2012* 2013** 2014** 2015**Exports 135 152.5 158 172.3 187.1Imports 240.8 236.5 253 272.2 291.2Volume of trade 375.8 389 411 444.5 478.3Balance of trade -106 -84 -95 -99.9 -104.1Exports/Imports (%) 56.1 64.5 62.5 63.3 64.3

Turkey's Share in Global Merchandise Exports (%)Turkey's Share in Global Merchandise Exports (%)

Turkey’s share in global merchandise exports was %0.83 in 2012.


Source: WTO

2626

Foreign Trade Volume/GDP (%)Foreign Trade Volume/GDP (%)

The ratio of foreign trade volume/GDP was 49.5% in 2012. Turkey’s integration to the international trade system is eminent.

April 2013April 2013 Ministry of Economy Ministry of Economy

Foreign Trade Developments Foreign Trade Developments

In January-February period 2013 compared to same period of 2012, exports increased by 8.3% and imports increased by 8.3% respectively.

Source: Ministry of Economy


2011 - 2012 / January-February 2012 - 20132011 - 2012 / January-February 2012 - 2013

* Energy corresponds to Chapter 27.

2011 2012 2012 / (JAN - FEB) 2013 / (JAN - FEB)Change (%) 2012/2013

Export 134.9 152.5 22.1 23.9 8.3Energy Export 6.5 7.7 1.3 1.1 -14.5Gold Export 1.5 13.3 0.7 1.0 41.6

Import 240.8 236.5 35.3 38.2 8.3Energy Import 54.1 60.1 9.5 9.1 -3.6Gold Import 6.1 7.6 0.4 1.7 307.2

Foreign Trade Volume 375.7 389.0 57.4 62.1 8.3Foreign Trade Balance -105.9 -84.1 -13.2 -14.3 8.4Balance excl. Energy -58.4 -31.6 -5.0 -6.2 25.2Export/Import (%) 56.0 64.5 62.7 62.7 *

Annual (Billion $) Periodic (Billion Dollar)

Monthly Exports/Imports Monthly Exports/Imports


In Febuary 2013 compared to same period of 2012 exports have increased by 5.8% and reached to the level of 12.4 billion dollar and imports have increased by 9% up to the level of 19.4 billion dollar.

Distribution of Foreign Trade in Broad Economic Categories Distribution of Foreign Trade in Broad Economic Categories

EXPORT

2929

IMPORT


2011/2012 2012/20132011 2012 Değ.% 2012 2013 Change %

Investment Goods 14,192 13,735 -3.2 2,191.3 2,349 9.8 7.2Intermediate Goods 67,942 82,669 21.7 11448.0 12,123 50.7 5.9Consumption Goods 52,219 55,569 6.4 8,408.2 9,364 39.1 11.4Others 555 516 -7.0 49.0 98 0.4 99.7TOTAL 134,907 152,489 13.0 22,096.5 23,934 100.0 8.3

Periodic (January-February)Annual Jan-Feb % Share

(Million $)

2011/2012 2012/20132011 2012 Değ.% 2012 2013 Change %

Investment Goods 37,271 33,925 -9.0 4,950 5,415 14.2 9.4Intermediate Goods 173,140 174,931 1.0 26,387 28,481 74.6 7.9Consumption Goods 29,692 26,699 -10.1 3,783 4,111 10.8 8.7Others 739 990 34.1 136 189 0.5 38.7TOTAL 240,842 236,545 -1.8 35,256 38,195 100.0 8.3

(Million $) Annual Periodic (January-February) Jan-Feb % Share

Main Export Items Main Export Items

Source: TURKSTAT

3030

* Percent change is related to the annual change in exports in 2013.


Million Dolar CHANGE % Rank Code Periodic (January-February) 2012 2013 2012 2013 2012 2013 2012/2013

1 87 Vehicle other than railway or tramway rolling-stock, parts thereof 2,518 2,525 1,750 1,917 768 608 0.32 84 Boilers, machinery and mechanical appliances, parts thereof 1,761 1,918 3,741 4,392 -1,980 -2,473 8.93 72 Iron and steel 1,874 1,754 3,214 2,869 -1,340 -1,114 -6.44 71 Pearls, precious stones, precious metals and articles thereof 1,122 1,527 558 1,897 563 -370 36.15 61 Knitted and crocheted goods and articles thereof 1,299 1,428 123 129 1,176 1,299 10.06 85 Electrical machinery and equipment: parts thereof 1,441 1,395 2,564 2,622 -1,124 -1,226 -3.27 27 Mineral fuels, minerals oils and product of their distillation 1,286 1,099 9,456 9,111 -8,170 -8,012 -14.58 62 Non knitted and crocheted goods and articles thereof 876 978 250 237 626 741 11.79 73 Articles of iron and steel 934 946 337 414 597 532 1.3

10 39 Plastic and articles thereof 686 783 1,967 2,264 -1,281 -1,481 14.113,796 14,354 23,961 25,851 -10,166 -11,498 4.022,097 23,934 35,256 38,195 -13,160 -14,261 8.3

EXPORT IMPORT BALANCE

LIST TOTALTOTAL

Main Import Items Main Import Items

Source: TURKSTAT

3131

* Percent change is related to the annual change in imports in 2013


Million Dollar CHANGE %Rank Code Periodic (January-February) 2012 2013 2012 2013 2012 2013 2012/2013

1 27 Mineral fuels, minerals oils and product of their distillation 9,456 9,111 1,286 1,099 -8,170 -8,012 -3.62 84 Boilers, machinery and mechanical appliances, parts thereof 3,741 4,392 1,761 1,918 -1,980 -2,473 17.43 72 Iron and steel 3,214 2,869 1,874 1,754 -1,340 -1,114 -10.84 85 Electrical machinery and equipment, parts thereof 2,564 2,622 1,441 1,395 -1,124 -1,226 2.25 39 Plastic and articles thereof 1,967 2,264 686 783 -1,281 -1,481 15.16 87 Vehicle other than railway or tramway rolling-stock, parts thereof 1,750 1,917 2,518 2,525 768 608 9.57 71 Pearls, precious stones, precious metals and articles thereof 558 1,897 1,122 1,527 563 -370 239.98 29 Organic chemicals 758 848 86 117 -672 -731 11.99 90 Optical, photographic, cinematographic, measuring checking, precision 602 677 80 94 -522 -583 12.5

10 74 Copper and articles thereof 584 656 226 227 -358 -429 12.325,197 27,253 11,080 11,441 -14,116 -15,812 8.235,256 38,195 22,097 23,934 -13,160 -14,261 8.3

IMPORT EXPORT BALANCE

LIST TOTAL TOTAL

Main Export Partners (Share,%)

Main Trade Partners (JanuaryMain Trade Partners (January-February -February 20120133))

Main Import Partners (Share,%)

Source: TURKSTAT


Exports by RegionsExports by Regions

Source: TURKSTAT

April April 20120133 Ministry of Economy Ministry of Economy 3333

2012 2013 Change(%) 2012 2013 Change(%) A- EU (27) 4,921 5,095 3.5 9,421 9,917 5.3 B- FREE ZONES IN TURKEY 213 208 -2.3 404 398 -1.4 C- OTHER COUNTRIES 6,615 7,133 7.8 12,271 13,619 11.0 1- OTHER EUROPE 1,263 1,127 -10.7 2,199 2,133 -3.0 2- AFRICA 1,238 1,216 -1.8 2,132 2,280 7.0 North Africa 900 903 0.3 1,513 1,601 5.8 Other Africa 338 313 -7.5 619 680 9.8 3- AMERICA 862 822 -4.6 1,575 1,525 -3.2 North America 624 519 -16.9 1,142 982 -14.0 Central America And Caraips 80 85 6.5 144 134 -6.8 South America 158 218 38.2 289 409 41.4 4- ASIA 3,156 3,901 23.6 6,230 7,567 21.5 Near And Middle Eastern 2,371 2,933 23.7 4,694 5,622 19.8 Other Asia 785 968 23.3 1,537 1,945 26.6 5- AUSTRALIA AND NEW ZEALAND 39 40 0.9 75 82 8.3 6- OTHER COUNTRIES AND REGIONS 57 27 -51.7 60 32 -47.8

TOTAL 11,748 12,435 5.8 22,097 23,934 8.3

(Million $)February January-February

ImportImports by Regionss by Regions

Source: TURKSTAT


2012 2013 Change(%) 2012 2013 Change(%) A- EU (27) 6,725 7,075 5.2 12,758 13,699 7.4 B- FREE ZONES IN TURKEY 80 107 33.6 160 203 27.1 C- OTHER COUNTRIES 10,982 12,213 11.2 22,339 24,294 8.8 1- OTHER EUROPE 2,469 3,137 27.0 5,496 6,177 12.4 2- AFRICA 369 430 16.4 763 905 18.7 North Africa 197 214 8.6 421 541 28.5 Other Africa 172 215 25.4 341 364 6.6 3- AMERICA 1,533 1,583 3.3 3,137 3,175 1.2 North America 1,210 1,065 -12.0 2,374 2,317 -2.4 Central America And Caraips 79 233 193.1 162 315 94.7 South America 244 285 17.0 602 543 -9.7 4- ASIA 5,368 5,770 7.5 10,841 11,755 8.4 Near And Middle Eastern 1,374 1,907 38.8 3,162 3,808 20.4 Other Asia 3,993 3,863 -3.3 7,679 7,947 3.5 5- AUSTRALIA AND NEW ZEALAND 97 21 -78.1 122 96 -21.2 6- OTHER COUNTRIES AND REGIONS 1,146 1,272 11.0 1,979 2,185 10.4

TOTAL 17,787 19,394 9.0 35,256 38,195 8.3

(Million $)February January-February

Tariff RatesTariff Rates

Source: WTO Tariff Profiles, 2012


2) SERVICES2) SERVICES


Tourism: Besides increasing the number of tourist arrivals, creating a structure that improves service quality, targets high-income groups by diversifying marketing channels, preserves natural capital and sustainability, and stimulates those types of tourism where Turkey has comparative advantages

Construction, Engineering-Architecture, Technical Consultancy and Contracting Services: Establishing a structure that fits Turkey’s economic and social needs, that is compatible with high technology and international rules, that is sensitive to environment, that creates high value added, high foreign exchange inflow and high employment, that grants high service quality, and that relies on qualified human and physical capital.

Commercial Services: Increasing productivity and commercial trade volume in a competitive way, and to encourage technology and innovation.

Targets in ServicesTargets in Services


Turkey's Share in Global Services Exports (%)Turkey's Share in Global Services Exports (%)

Source: WTO, CBRT

Turkey’s share in global exports of services was 0.97% in 2012.


Balance of Payments - ServicesBalance of Payments - Services

*January-FebruarySource: CBRT


Million $ 2009 2010 2011 2012 2012* 2013*2012*-2013* Change (%)

BALANCE ON SERVICES 18,581 16,658 20,130 23,545 1,390 1,327 -4.5 Total Services Exports 35,653 36,279 40,668 43,952 4,004 4,585 14.5 Total Services Imports -17,072 -19,621 -20,538 -20,407 -2,614 -3,258 24.6 1.Transportation 1,815 1,308 2,279 4,220 273 326 19.4 Credit 8,264 9,342 10,795 12,953 1,438 1,663 15.6 Debit -6,449 -8,034 -8,516 -8,733 -1,165 -1,337 14.8 2.Travel 18,405 17,391 20,171 21,559 1,364 1,522 11.6 Credit 22,980 22,585 25,054 25,653 1,830 2,138 16.8 Debit -4,575 -5,194 -4,883 -4,094 -466 -616 32.2 3.Construction Services 1,090 859 838 1,028 151 117 -22.5 4.Insurance Services -554 -541 -468 -380 -48 -46 -4.2 5.Financial Services -355 -234 -690 -644 -80 -125 56.3 6.Other Business Services -1,286 -1,340 -1,427 -1,536 -192 -311 62.0 7.Government Services -846 -869 -1,059 -965 -108 -119 10.2 8.Other Services 312 84 486 263 30 -37 -223.3

Tourism Statistics (Quarterly)Tourism Statistics (Quarterly)


Tourists visited, Source: TURKSTAT Turkey ranks as the 6th in the world and the 4th in Europe among the

most favourite tourism destinations. Turkey’s income per tourist increased by 1% in 2011 and remained the

same in 2012.

Contracting Services AbroadContracting Services Abroad

4141

31 out of the world’s top 225 contracting companies are Turkish.

Turkey ranks as the 2nd country (following China) in terms of the number of top contracting companies.

Contributions to the overall economic performance: Creating foreign exchange inflow, exports, employment, technology transfer; adding to the machinery stock, facilitating internationalization


Years Projects CountriesCum.

Project Volume ($)

Avr. Project

Volume ($)

2002 131 32 2,570 202003 278 37 4,503 162004 423 39 11,322 272005 406 34 12,317 302006 519 36 24,255 472007 576 44 25,188 442008 623 40 24,618 402009 484 45 21,470 442010 583 50 22,477 392011 513 49 19,973 392012 441 44 26,610 602013 36 12 5,972 166

Last updated on 1 April 2013

Logistics (2012)Logistics (2012)

4242

Europe’s biggest truck fleet (45 thousands trucks and 1,420 companies) Almost 1.1 million flights in 2012 (2.4 million tonnes freight and 130 million passengers) 25. biggest fleet in the world 48 airports and 76 ports Total length of divided highways will reach 15 thousand

kilometers. High-speed railway projects are carried out rapidly.


EnergyEnergy

4343

Turkey is an energy hub between energy producer and consumer regions


C- INVESTMENTS, FOREIGN CAPITAL and C- INVESTMENTS, FOREIGN CAPITAL and INCENTIVESINCENTIVES

4444April 2013April 2013 Ministry of Economy Ministry of Economy

Investment Climate in TurkeyInvestment Climate in Turkey

4545

1- SOUND ECONOMIC PERFORMANCE 6- CENTRAL LOCATION2- YOUNG and DYNAMIC POPULATION

7- ENERGY CORRIDOR and TERMINAL of EUROPE

3- QUALIFIED and COMPETITIVE LABOR FORCE

8- LOW TAX RATES and INCENTIVE FACILITIES

4- LIBERAL and INNOVATIVE INVESTMENT CLIMATE

9- CUSTOMS UNION with EU and OPEN ECONOMY

5- INFRASTRUCTURE 10- DOMESTIC MARKET

10 REASONS TO INVEST IN TURKEY


Time Time RRequired to equired to SStart a tart a BBusinessusiness

The required time to start a business is 6 days in Turkey.

Source: Invest In Turkey


Skilled Labour AvailabilitySkilled Labour Availability

Scoring is between 0 and 10.



Finance SkillsFinance Skills


4848

Scoring is between 0 and 10.


The Sectoral Breakdown of Foreign InvestmentsThe Sectoral Breakdown of Foreign Investments

Source: CBRT

* January-February


(Million $) 2010 2011 2012* 2013*AGRICULTURE 32 38 8 2INDUSTRIAL SECTORS 7,965 5,466 456 565 Mining and Quarrying 146 214 21 151 Manifacturing 3,573 4,329 374 195 Production and Distribution of Electricity, Gas, 4,244 923 61 219SERVICES SECTOR 8,058 4,497 831 559

TOTAL 16,055 10,002 1,295 1,126

Janu

ary-

Feb

ruar

y 20

13

Breakdown of Foreign Investments by CountryBreakdown of Foreign Investments by Country

Source: CBRT

5050

* January-February

April April 20120133 Ministry of Economy Ministry of Economy

2011 2012 2012* 2013*1 Japan 231 33 1 3032 Austria 2,418 1,491 11 1923 Russia 762 11 1 1264 Netherlands 1,425 1,175 371 885 France 999 99 5 846 Germany 665 532 89 527 USA 1,402 438 67 508 Azerbaijan 1,266 339 152 389 Luxembourg 555 1,250 164 34

10 South Korea 52 56 1 2111 Italy 111 178 32 1712 England 904 1,996 35 1613 Malaysia 15 461 230 1314 Belarus 0 0 0 1215 A. Arab Emir. 89 52 4 1116 China 0 10 9 917 Greece 111 49 8 818 Swiss 233 445 18 819 Kuwait 43 242 6 820 Spain 2,251 163 7 7

15,783 9,183 1,218 1,10416,055 10,001 1,295 1,126

LIST TOTALTOTAL

Million $

Investment Incentive SystemInvestment Incentive System

The current investment incentive system of Turkey is structured in four sub systems:

General Investment Incentive System Regional Investment Incentive System Investment Incentive System for Big Scale

Projects Encouraging the Strategic Investments

5151April April 20120133 Ministry of Economy Ministry of Economy

Investment Incentives (January-March)Investment Incentives (January-March)

Source: General Directorate of Incentive Implementation and Foreign Investment


Region I Region II Region III Region IV Region V Region VI Various TOTAL2011 371 226 173 173 107 134 1 1,1852012 319 171 149 121 69 95 0 9242013 484 212 178 136 134 165 8 1,317

CERTIFICATES ISSUED

2011 1,129 16,631 34,1222012 924 11,304 26,8042013 1,317 22,623 43,451

Certificates Issued

Amount of Fixed Investments (Million TL)

Potential Employment

(People)

D - FREE ZONES IN TURKEYD - FREE ZONES IN TURKEY


Tax advantages for manufacturers Medium-and long-term investment view Availability to transfer profits Commercial facilities Exemptiın from customs duties Acquisition of the documents relating to the free movement of goods under the

scope of Customs Union with the EU Principle of equality No time restrictions Flexibility to adjust to the market needs and conditions Reliable inflation accounting Market access to domestic and foreign markets Reduced bureaucratic procedures and dynamic business management Strategic advantages. Affordable and compatible infrastructure Supply chain opportunities

The Advantages of Free Zones for UsersThe Advantages of Free Zones for Users


Free Zones in TurkeyFree Zones in Turkey

55,938 people have been employed in Free Zones of Turkey in 2012.


Trade Flows of Free ZonesTrade Flows of Free Zones

In 2012 total trade volume of the Free Zones reached to 23.1 billion dollars, increasing 1.8% annually.

Source: General Directorate of Free Zones, Foreign Investments and Services


Million $ 2008 2009 2010 2011 2012From Domestic Market to Free Zones 3,195 2,177 2,295 2,668 2,971From Free Zones to Abroad 5,874 4,914 4,361 6,924 7,070From Abroad to Free Zones 8,248 5,493 6,626 7,253 7,258From Free Zones to Domestic Market 7,262 5,174 5,291 5,801 5,754

TOTAL TRADE VOLUME 24,578 17,757 18,572 22,646 23,053

Concentration in Free Zones by IndustriesConcentration in Free Zones by Industries

Source: General Directorate of Free Zones, Foreign Investments and Services

Istanbul Ataturk Airport FZ Services and SoftwareAntalya FZ Yacht-building, Medical EquipmentKocaeli FZ Ship-buildingAvrupa FZ Ready-WearMersin FZ Ready-WearBursa FZ Automotive sub-industriesIzmir FZ LeatherTUBITAK-MAM FZ R&D ActivitiesAdana-Yumurtalik FZ Ship Repair and Maintenance


E - E - BBIILATERAL, REGLATERAL, REGIIONAL, ONAL, PLURILATERAL and PLURILATERAL and MULTMULTIILATERAL LATERAL

TRADETRADE


Trade Relationships of Turkey with OthersTrade Relationships of Turkey with Others

Bilateral Trade Relationships of Turkey

Europe, Asia-Pacific, Eurasia, Middle East and North Africa, Sub-Saharan Africa, Americas

Regional and Multiple Trade Relationships of Turkey

EU, ECO, D8, BSEC, OIC, COMCEC

Multilateral Trade Relationships of Turkey

WTO, OECD, ACTA


Regional Breakdown of ExportsRegional Breakdown of Exports

Source: TURKSTAT * January-February ** Except Lebanon,Mauritius and Korea

In January-February period of 2013, our exports to EFTA countries decreased by 61.3% and our exports to FTA countries decreased by 13.6% annually. The annual increase of our exports to Turk Republics in the same period was 29.9% and Turk Republics became the fastest growing export destination of the regions above.


(Million $) 2011 2012 Change %Share % (2011)

2012* 2013* Change %Share % (2012*)

CIS 13,377 15,083 12.8 9.9 2,011 2,508 24.7 10.5EFTA 1,887 2,601 37.8 1.7 603 233 -61.3 1.0Economic Cooperation Organisation 9,292 16,569 78.3 10.9 1,334 1,574 17.9 6.6Organization of Islamic Conference 37,325 55,249 48.0 36.2 6,703 7,808 16.5 32.6Black Sea Economic Cooperation 17,768 18,799 5.8 12.3 2,577 2,942 14.2 12.3FTA Countries** 13,602 14,576 7.2 9.6 2,453 2,119 -13.6 8.9OECD 67,114 66,346 -1.1 43.5 10,932 10,751 -1.7 44.9Turkic Republics 5,040 5,845 16.0 3.8 756 982 29.9 4.1

TOTAL 134,907 152,561 13.1 100.0 22,097 23,934 8.3 100.0

Chronological Evolution of the Relationship between Turkey and the EUChronological Evolution of the Relationship between Turkey and the EU

12 September 1963: Ankara Agreement 13 November 1970: The signing of the Additional Protocol 1 January 1973: Additional Protocol to come into force 14 April 1987: Turkey’s Application for Membership 5 March 1995: The Association Council Decision Establishing the

Customs Union 10-11 December 1999: Recognition of the Candidate Status of

Turkey at the Helsinki Summit 8 March 2001: The first Accession Partnership Document issued 17 December 2004: European Council decision to start

Negotiations with Turkey in Brussels Summit 3 October 2005: Start of the Negotiations between Turkey and the

EU 20 October 2005: Start of the Screening Process 13 October 2006: End of the Screening Process


The process of Accession Negotiations between Turkey and the EUThe process of Accession Negotiations between Turkey and the EU

Negotiations for 1 chapter were temporarily opened and closed afterwards.– Science and Research

Negotiations for 12 chapter were opened but closure criteria to all those negotiations were imposed bt the EU.

– Business and Industry Policy, – Statistics, – Financial Control, – Consumer and Health Protection, – Trans-European Networks, – Intellectual Property Law, – Company Law, – Free Movement of Capital, – Information Society and Media, – Taxation, – Environment, – Food Safety, Veterinary and Plant Health

Position papers of Turkey for 2 negotiations were forwarded to the EU. EU Common Position Paper is expected to be announced.

– Education and Culture,– Economic and Monetary Policy

For the opening of 8 chapters opening criterias of the EU have to be met by Turkey.In all other chapters, Screening Reports are expected to be announced by the EU.


Trade between Turkey and the EUTrade between Turkey and the EU

*January-FebruarySource: Data Source of the Ministry of Economy


1. EFTA (Norway, Switzerland, Iceland, Liechtenstein)

2. Israel

3. Macedonia

4. Croatia

5. Bosnia and Herzegovina

6. Palestine

7. Tunisia

8. Morocco

9. Syria (**)

FTA CountriesFTA Countries

10. Egypt

11. Albania

12. Georgia

13. Montenegro

14. Serbia

15. Chile

16. Jordan

17. Lebanon*

18. Mauritius***

19. South Korea****

(*) Agreements that are in the approval process

(**) Pending

(***) Will enter into force on 1st June 2013

(****) Will enter into force on 1st May 2013


Our exports to FTA Countries increased %7.2 in 2012. The share of FTA Countries in total exports reached

%9.6. Turkey recorded a trade surplus of 3.9 billion USD in

2012 with FTA Countries, while there was a trade deficit of 1.5 billion USD in 2002.

Trade with FTA CountriesTrade with FTA Countries


Trade Representatives AbroadTrade Representatives Abroad

208 trade representatives from the Ministry are serving in 105 locations and 8 offices abroad.


Daimi Temsilci Yardımcılığı

Ticaret Müşavirliği

Ticaret Ataşeliği

İrtibat Büroları

AFRİKA

KahireNairobi PretoriaRabatTrablusTunusKazablanka

ASYA

Astana Aşkabat Bangkok Bişkek Cakarta Duşanbe Hanoiİslamabad Kabil Kuala Lumpur Manila Pekin Seul Singapur

AVRUPA/KAFKASYAAVRUPA/KAFKASYAABDTÖOECDAtina Bakü Belgrad Berlin Bern BratislavaBrüksel Budapeşte Bükreş Dublin Helsinki Kiev Kişinev Kopenhag Lahey LizbonLefkoşa

Londra LubliyanaMadrid Minsk MoskovaOslo ParisPodgoricaPragPriştineRomaSaraybosna Sofya Stokholm TiflisTiran Üsküp Varşova Viyana Zagreb

BarselonaBatumDüsseldorfHamburgHannoverKazanMarsilyaMilanoMünihNovorossiskOdessaRotterdamSelanikSt. PetersburgStutgartBirminghamKrasnodarNovosibirskYekaterinburg

Taşkent Tokyo Ulan Bator Yeni Delhi AlmatıGuangzhouHong Kong KaraçiMumbaiŞangayGeorgetown

AbujaAddis Ababa AkraCezayirDakarDarüsselamHartumİskenderiye

Buenos Aires KarakasMexico CityOttavaSantiagoVaşingtonHoustonLos Angeles

AMERİKA

ORTA DOĞUORTA DOĞUAbu Dhabi Amman BağdatBeyrutDohaKuveytManama

MuskatRiyadSana ŞamTahranTel Aviv Basra

CiddeDubaiErbilHalepKudüsMusulTebriz

SidneyMelbourne

AVUSTRALYAAVUSTRALYA

New YorkSao PauloŞikagoTorontoMiamiSan FranciscoSeattle

GEORGETOWN

Locations of Trade RepresentativesLocations of Trade Representatives


• Export Oriented Production Strategy and Input Supply Strategy

• Market Access Strategy• Supporting Exports • Trade Remedies• Restructuring the Incentive System• Improving the Investment Climate• Trade Agreements• Next-Generation Free Zones• Trade in Services and Turkish Investments Abroad • Market Surveillance and Inspection• Strengthening the Organization Abroad

Projects with Future ProspectsProjects with Future Prospects


Documents

MINISTRY of ECONOMY ECONOMIC OUTLOOK APRIL 2013 Economic Outlook is revized in the 1st and the 3rd weeks of the month. Recent Update: 26/04/2013