n ational b ank see-5 & turkey: macro challenges paul mylonas chief economist, general manager...
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NATIONAL BANK
SEE-5 & Turkey: Macro Challenges
Paul Mylonas
Chief Economist, General Manager of Strategy and Governance, National Bank Group
NATIONAL BANK
BANK OF GREECE - UNIVERSITY OF OXFORD (SEESOX) CONFERENCEATHENS, 11 February 2011
Strategy & Economic Research Division
NATIONAL BANK
A narrowing of sovereign spreads suggests that markets are more sanguine regarding economic prospects
Strategy & Economic Research Division p.2
SEE-5 & Turkey: Macro Challenges
Sovereign Spread (USD, 2012)
0
100
200
300
400500
600
700
800
900
01
/07
04
/07
07
/07
10
/07
02
/08
05
/08
08
/08
12
/08
03
/09
06
/09
09
/09
01
/10
04
/10
07
/10
11
/10
02
/11
0
100
200
300
400500
600
700
800
900
Sovereign Spread (EUR, 2012)
0100200300400500600700800900
1000
01
/07
04
/07
07
/07
10
/07
02
/08
05
/08
08
/08
12
/08
03
/09
06
/09
09
/09
01
/10
04
/10
07
/10
11
/10
02
/11
01002003004005006007008009001000
Sovereign Spread (EUR, 2013)
0
100
200
300
400
500
600
01
/07
04
/07
07
/07
10
/07
02
/08
05
/08
08
/08
12
/08
03
/09
06
/09
09
/09
01
/10
04
/10
07
/10
11
/10
02
/11
0
100
200
300
400
500
600
Sovereign Spread (USD, 2024)
0100200300400500600700800900
1000
01
/07
04
/07
07
/07
10
/07
02
/08
05
/08
08
/08
12
/08
03
/09
06
/09
09
/09
01
/10
04
/10
07
/10
11
/10
02
/11
01002003004005006007008009001000
Sovereign Spread (EUR, 2015)
0100200300400500600700800900
1000
01
/07
04
/07
07
/07
10
/07
02
/08
05
/08
08
/08
12
/08
03
/09
06
/09
09
/09
01
/10
04
/10
07
/10
11
/10
02
/11
01002003004005006007008009001000
Romania Bulgaria Serbia
FYROM Turkey European Periphery
0100200300400500
600700800900
1000
01
/08
04
/08
07
/08
10
/08
01
/09
04
/09
07
/09
10
/09
01
/10
04
/10
07
/10
10
/10
01
/11
0100200300400500
6007008009001000
Greece
Ireland
Spain
Portugal
10-Y Sovereign Spreads
NATIONAL BANK
Output growth recovering weakly in SEE
Strategy & Economic Research Division p.3
SEE-5 & Turkey: Macro Challenges
Real GDP (y-o-y % change)
-10-8-6-4-202468
10
Q1
:03
Q3
:03
Q1
:04
Q3
:04
Q1
:05
Q3
:05
Q1
:06
Q3
:06
Q1
:07
Q3
:07
Q1
:08
Q3
:08
Q1
:09
Q3
:09
Q1
:10
Q3
:10
-10-8-6-4-20246810
Q1:03-Q4:08 CAGR
Q1:09-Q3:10 CAGR
Real GDP (y-o-y % change)
-8
-6-4
-20
24
68
10
Q1
:03
Q3
:03
Q1
:04
Q3
:04
Q1
:05
Q3
:05
Q1
:06
Q3
:06
Q1
:07
Q3
:07
Q1
:08
Q3
:08
Q1
:09
Q3
:09
Q1
:10
Q3
:10
-8
-6-4
-20
24
68
10
Q1:03-Q4:08 CAGR
Q1:09-Q3:10 CAGR
Real GDP (y-o-y % change)
-6
-4-2
02
46
810
12
Q1
:03
Q3
:03
Q1
:04
Q3
:04
Q1
:05
Q3
:05
Q1
:06
Q3
:06
Q1
:07
Q3
:07
Q1
:08
Q3
:08
Q1
:09
Q3
:09
Q1
:10
Q3
:10
-6
-4-2
02
46
810
12
Q1:03-Q4:08 CAGR
Q1:09-Q3:10 CAGR
Real GDP (y-o-y % change)
-4
-2
0
2
4
6
8
10
Q1
:03
Q3
:03
Q1
:04
Q3
:04
Q1
:05
Q3
:05
Q1
:06
Q3
:06
Q1
:07
Q3
:07
Q1
:08
Q3
:08
Q1
:09
Q3
:09
Q1
:10
Q3
:10
-4
-2
0
2
4
6
8
10
Q1:03-Q4:08 CAGR
Q1:09-Q3:10 CAGR
Real GDP (y-o-y % change)
-2
0
2
4
6
8
10
Q1
:03
Q3
:03
Q1
:04
Q3
:04
Q1
:05
Q3
:05
Q1
:06
Q3
:06
Q1
:07
Q3
:07
Q1
:08
Q3
:08
Q1
:09
Q3
:09
Q1
:10
Q3
:10
-2
0
2
4
6
8
10Q1:03-Q4:08 CAGR
Q1:09-Q3:10 CAGR
Real GDP (y-o-y % change)
-15
-12-9
-6-3
03
69
12
Q1
:03
Q3
:03
Q1
:04
Q3
:04
Q1
:05
Q3
:05
Q1
:06
Q3
:06
Q1
:07
Q3
:07
Q1
:08
Q3
:08
Q1
:09
Q3
:09
Q1
:10
Q3
:10
-15
-12-9
-6-3
03
69
12
Q1:03-Q4:08 CAGR
Q1:09-Q3:10 CAGR
Romania Bulgaria Serbia
FYROM Albania Turkey
NATIONAL BANK
What is the level of potential growth post crisis?
Strategy & Economic Research Division p.4
SEE-5 & Turkey: Macro Challenges
2003-2008CAGR (%, A)
2010 Growth (%, F)
2011 Growth (%, F)
Potential Growth
(%)
2010 Output
Gap (%, E)
2009 Per capita GDP in PPS (EU27=100)
Romania 6.6 -2.2 1.5 3.0-4.0 -3.3 45
Bulgaria 6.3 -0.2 2.3 2.5-3.5 -2.5 41
Serbia 5.7 2.1 3.5 3.0-4.0 -1.9 37
FYROM 4.4 0.7 2.8 2.5-3.5 -1.3 35
Albania 6.0 4.4 5.5 3.5-4.5 -0.5 27
Turkey 6.0 10.0 5.0 3.5-4.5 -0.7 46
NATIONAL BANK
Main macroeconomic challenges
Strategy & Economic Research Division p.5
SEE-5 & Turkey: Macro Challenges
Balanced output growth
Sufficient financing
Monetary and fiscal policy nexus
Progress on structural reforms
NATIONAL BANK
Large external imbalances corrected rapidly … but is it permanent or temporary?
Strategy & Economic Research Division p.6
SEE-5 & Turkey: Macro Challenges
Current Account Deficit (12-m rolling sum, % of GDP)
0
2
4
6
8
10
12
14
16
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
2
4
6
8
10
12
14
16
Current Account Deficit (12-m rolling sum, % of GDP)
0
5
10
15
20
25
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
5
10
15
20
25
Current Account Deficit (12-m rolling sum, % of GDP)
0
3
6
9
12
15
18
21
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
3
6
9
12
15
18
21
Current Account Deficit (12-m rolling sum, % of GDP)
0
2
4
6
810
12
14
16
18
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
2
4
6
810
12
14
16
18
Current Account Deficit (12-m rolling sum, % of GDP)
0
2
4
6
810
12
14
16
18
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
2
4
6
810
12
14
16
18
Current Account Deficit (12-m rolling sum, % of GDP)
0
1
2
3
4
5
6
7
8
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
1
2
3
4
5
6
7
8
Romania Bulgaria Serbia
FYROM Albania Turkey
NATIONAL BANK
Exports, the main engine of growth, have recovered markedly and suggest competitive and open economies
Strategy & Economic Research Division p.7
SEE-5 & Turkey: Macro Challenges
Merchandise Exports (12-m rolling sum, EUR, y-o-y % change)
-20-15-10
-505
1015202530
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-20-15-10-5051015202530
Merchandise Exports (12-m rolling sum, EUR, y-o-y % change)
-30
-20
-10
0
10
20
30
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-30
-20
-10
0
10
20
30
Merchandise Exports (12-m rolling sum, EUR, y-o-y % change)
-20-15-10
-505
1015202530
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-20-15-10-5051015202530
Merchandise Exports (12-m rolling sum, EUR, y-o-y % change)
-30
-20
-10
0
10
20
30
40
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-30
-20
-10
0
10
20
30
40
Merchandise Exports (12-m rolling sum, EUR, y-o-y % change)
-20-15-10
-505
1015202530
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-20-15-10-5051015202530
Merchandise Exports (12-m rolling sum, EUR, y-o-y % change)
-30
-20
-10
0
10
20
30
40
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-30
-20
-10
0
10
20
30
40
Exports of G&S/GDP
= 27.2% (2010E)
Romania Bulgaria Serbia
FYROM Albania Turkey
Exports of G&S/GDP
= 35.0% (2010E)
Exports of G&S/GDP
= 56.1% (2010E) Exports of G&S/GDP
= 32.9% (2010E)
Exports of G&S/GDP
= 44.0% (2010E)
Exports of G&S/GDP
= 31.2% (2010E)
NATIONAL BANK
Large output gaps reflected in high unemployment rates, creating political pressures
Strategy & Economic Research Division p.8
SEE-5 & Turkey: Macro Challenges
Romania Bulgaria Serbia
FYROM Albania Turkey
Unemployment Rate (%)
6
8
10
12
14
16
18
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
6
8
10
12
14
16
18
Unemployment Rate (%)
2
3
4
5
6
7
8
9
10
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
2
3
4
5
6
7
8
9
10
Unemployment Rate (%)
4
5
6
7
8
9
10
11
12
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
4
5
6
7
8
9
10
11
12
Unemployment Rate (%)
12
13
14
15
16
17
18
19
20
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
12
13
14
15
16
17
18
19
20
Unemployment Rate (%)
30
31
32
33
34
35
36
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
30
31
32
33
34
35
36
Unemployment Rate (%)
12,0
12,5
13,0
13,5
14,0
14,5
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
12,0
12,5
13,0
13,5
14,0
14,5
NATIONAL BANK
Weak recovery in output and external account correction mainly due to a shortage of external financing
Strategy & Economic Research Division p.9
SEE-5 & Turkey: Macro Challenges
Capital Inflows (Net, 12-m rolling sum, % of GDP)
-5
05
1015
2025
3035
40
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-5
05
1015
2025
3035
40
FDI OtherTotal
Capital Inflows (Net, 12-m rolling sum, % of GDP)
-5
0
5
10
15
20
25
30
35
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-5
0
5
10
15
20
25
30
35
FDI IMF Other Total
Capital Inflows (Net, 12-m rolling sum, % of GDP)
-5
0
5
10
15
20
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-5
0
5
10
15
20FDI Other Total
Capital Inflows (Net, 12-m rolling sum, % of GDP)
-5
0
5
10
15
20
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-5
0
5
10
15
20FDI Other Total
Capital Inflows (Net, 12-m rolling sum, % of GDP)
-5
0
5
10
15
20
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-5
0
5
10
15
20
FDI IMF EU Other Total
Capital Inflows (Net, 12-m rolling sum, % of GDP)
0
2
4
6
8
10
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
2
4
6
8
10
FDI Other Total
Romania Bulgaria Serbia
FYROM Albania Turkey
NATIONAL BANK
Domestic financing also tight, reflecting both demand and supply factors
Strategy & Economic Research Division p.10
SEE-5 & Turkey: Macro Challenges
Loans ( y-o-y % change)
-10
0
10
20
30
40
50
60
70
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-10
0
10
20
30
40
50
60
70
Loans ( y-o-y % change)
-10
0
10
20
30
40
50
60
70
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-10
0
10
20
30
40
50
60
70
Loans ( y-o-y % change)
05
101520253035404550
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
05101520253035404550
Loans ( y-o-y % change)
05
101520253035404550
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
05101520253035404550
Loans ( y-o-y % change)
-10
0
10
20
30
40
50
60
70
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-10
0
10
20
30
40
50
60
70
Loans ( y-o-y % change)
0
10
20
30
40
50
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
10
20
30
40
50
Romania Bulgaria Serbia
FYROM Albania Turkey
2002-2010 CAGR = 30.5%
2010 Loans/GDP = 43.3%
2002-2010 CAGR = 22.8%
2010 Loans/ GDP = 52.0%
2002-2010 CAGR = 31.5%
2010 Loans/GDP = 72.3%
2002-2010 CAGR = 39.3%
2010 Loans/GDP = 40.2%
2002-2010 CAGR = 36.3%
2010 Loans/GDP = 36.8% 2002-2010 CAGR = 19.3%
2010 Loans/GDP = 45.5%
NATIONAL BANK
FX-denominated loans continue to be the preferred credit instrument, raising banking sector vulnerabilities
Strategy & Economic Research Division p.11
SEE-5 & Turkey: Macro Challenges
FX Loans-to-Total Loans Ratio (%)
40
45
50
55
60
65
70
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
40
45
50
55
60
65
70
FX Loans-to-Total Loans Ratio (%)
40
45
50
55
60
65
70
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
40
45
50
55
60
65
70
FX Loans-to-Total Loans Ratio (%)
0
10
20
30
40
50
60
70
80
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
10
20
30
40
50
60
70
80
FX linked and FX denominatedFX denominated
FX Loans-to-Total Loans Ratio (%)
0
10
20
30
40
50
60
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
10
20
30
40
50
60
FX linked and FX denominatedFX denominated
FX Loans-to-Total Loans Ratio (%)
66
67
68
69
70
71
72
73
74
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
66
67
68
69
70
71
72
73
74
FX Loans-to-Total Loans Ratio (%)
22
24
26
28
30
32
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
22
24
26
28
30
32
Romania Bulgaria Serbia
FYROM Albania Turkey
NATIONAL BANK
Indeed, non-performing loans continue to rise, lagging the recovery
Strategy & Economic Research Division p.12
SEE-5 & Turkey: Macro Challenges
NPL Ratio (%)
02468
101214161820
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
Q1
:11
02468101214161820
NPL Ratio (%)
0
2
4
6
8
10
12
14
16
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
Q1
:11
0
2
4
6
8
10
12
14
16
NPL Ratio (%)
02468
101214161820
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
Q1
:11
02468101214161820
NPL Ratio (%)
0
2
4
6
8
10
12
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
Q1
:11
0
2
4
6
8
10
12
NPL Ratio (%)
0
2
4
6
8
10
12
14
16
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
Q1
:11
0
2
4
6
8
10
12
14
16
NPL Ratio (%)
0
1
2
3
4
5
6
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
Q4
:10
Q1
:11
0
1
2
3
4
5
6
Romania Bulgaria Serbia
FYROM Albania Turkey
NATIONAL BANK
Liquidity conditions, although improving as deposit growth is strong, remain tight
Strategy & Economic Research Division p.13
SEE-5 & Turkey: Macro Challenges
Loans-to-Deposits Ratio (%)
405060708090
100110120130140150
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
405060708090100110120130140150
Loans-to-Deposits RatioBenchmark Ratio
Loans-to-Deposits Ratio (%)
405060708090
100110120130140150
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
405060708090100110120130140150
Loans-to-Deposits RatioBenchmark Ratio
Loans-to-Deposits Ratio (%)
405060708090
100110120130140150
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
405060708090100110120130140150
Loans-to-Deposits RatioBenchmark Ratio
Loans-to-Deposits Ratio (%)
70
75
80
85
90
95
100
105
110
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
70
75
80
85
90
95
100
105
110
Loans-to-Deposits RatioBenchmark Ratio
Loans-to-Deposits Ratio (%)
40
50
60
70
80
90
100
110
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
40
50
60
70
80
90
100
110
Loans-to-Deposits RatioBenchmark Ratio
Loans-to-Deposits Ratio (%)
40
50
60
70
80
90
100
110
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
40
50
60
70
80
90
100
110
Loans-to-Deposits RatioBenchmark Ratio
Romania Bulgaria Serbia
FYROM Albania Turkey
Deposits: Dec. 10 y-o-y % change = 8.7% Deposits: Dec. 10 y-o-y % change = 18.0%
Deposits: Nov. 10 y-o-y % change = 13.2%
Deposits: Dec. 10 y-o-y % change = 7.0%
Deposits: Dec. 10 y-o-y % change = 20.3%
Deposits: Dec. 10 y-o-y % change = 13.9%
NATIONAL BANK
Strong profitability buffers have kept capital ratios at high levels
Strategy & Economic Research Division p.14
SEE-5 & Turkey: Macro Challenges
Capital Adequacy Ratio (%)
10
11
12
13
14
15
16
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
10
11
12
13
14
15
16
Capital Adequacy Ratio (%)
12
14
16
18
20
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
12
14
16
18
20
Capital Adequacy Ratio (%)
18
20
22
24
26
28
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
18
20
22
24
26
28
Capital Adequacy Ratio (%)
14
15
16
17
18
19
20
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
14
15
16
17
18
19
20
Capital Adequacy Ratio (%)
15
16
17
18
19
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
15
16
17
18
19
Capital Adequacy Ratio (%)
16
17
18
19
20
21
22
23
24
Q1
:07
Q2
:07
Q3
:07
Q4
:07
Q1
:08
Q2
:08
Q3
:08
Q4
:08
Q1
:09
Q2
:09
Q3
:09
Q4
:09
Q1
:10
Q2
:10
Q3
:10
16
17
18
19
20
21
22
23
24
Romania Bulgaria Serbia
FYROM Albania Turkey
NATIONAL BANK
No further room for fiscal policy support, reflecting weak initial conditions, lack of financing and credibility concerns
Strategy & Economic Research Division p.15
SEE-5 & Turkey: Macro Challenges
Tax Revenue, Primary Expenditure and Fiscal Balance (12-m rolling sum)
-10-8-6-4-202468
10
12
/06
04
/07
08
/07
12
/07
04
/08
08
/08
12
/08
04
/09
08
/09
12
/09
04
/10
08
/10
12
/10
-8
-7
-6
-5
-4
-3
-2
-1
0
Tax Rev. (y-o-y % change, lhs) Prim. Exp. (y-o-y % change, lhs)Fiscal Balance (% of GDP, rhs)
Tax Revenue, Primary Expenditure and Fiscal Balance (12-m rolling sum)
-2
0
2
4
6
8
10
12
12
/06
04
/07
08
/07
12
/07
04
/08
08
/08
12
/08
04
/09
08
/09
12
/09
04
/10
08
/10
12
/10
-6
-5
-4
-3
-2
-1
0
Tax Rev. (y-o-y % change, lhs) Prim. Exp. (y-o-y % change, lhs)Fiscal Balance (% of GDP, rhs)
Tax Revenue, Primary Expenditure and Fiscal Balance (12-m rolling sum)
-10
-5
0
5
10
15
20
25
12
/06
04
/07
08
/07
12
/07
04
/08
08
/08
12
/08
04
/09
08
/09
12
/09
04
/10
08
/10
12
/10
-6
-5
-4
-3
-2
-1
0
1
2
3
Tax Rev. (y-o-y % change, lhs) Prim. Exp. (y-o-y % change, lhs)Fiscal Balance (% of GDP, rhs)
Tax Revenue, Primary Expenditure and Fiscal Balance (12-m rolling sum)
-15
-10
-5
0
5
10
15
20
25
30
12
/06
04
/07
08
/07
12
/07
04
/08
08
/08
12
/08
04
/09
08
/09
12
/09
04
/10
08
/10
12
/10
-10-9-8-7-6-5-4-3-2-10
Tax Rev. (y-o-y % change, lhs) Prim. Exp. (y-o-y % change, lhs)Fiscal Balance (% of GDP, rhs)
Tax Revenue, Primary Expenditure and Fiscal Balance (12-m rolling sum)
-15
-10
-5
0
5
10
15
20
25
12
/06
04
/07
08
/07
12
/07
04
/08
08
/08
12
/08
04
/09
08
/09
12
/09
04
/10
08
/10
12
/10
-6
-4
-2
0
2
4
6
8
Tax Rev. (y-o-y % change, lhs) Prim. Exp. (y-o-y % change, lhs)Fiscal Balance (% of GDP, rhs)
Tax Revenue, Primary Expenditure and Fiscal Balance (12-m rolling sum)
-5
0
5
10
15
20
25
30
12
/06
04
/07
08
/07
12
/07
04
/08
08
/08
12
/08
04
/09
08
/09
12
/09
04
/10
08
/10
12
/10
-6
-5
-4
-3
-2
-1
0
Tax Rev. (y-o-y % change, lhs) Prim. Exp. (y-o-y % change, lhs)Fiscal Balance (% of GDP, rhs)
Romania Bulgaria Serbia
FYROM Albania Turkey
NATIONAL BANK
Fiscal policy has the capacity to further reduce budget deficits
Strategy & Economic Research Division p.16
SEE-5 & Turkey: Macro Challenges
2009 Fiscal Deficit (% of
GDP, A)
2010 Fiscal Deficit (% of
GDP, E)
2011 Fiscal Deficit (% of
GDP, F)
2010 Public
Debt (% of GDP, E)
PIT Rate
(%)
Corp. Tax Rate
(%)
VAT Rate (%)
2010 Revenue
(% of GDP, E)
Romania 7.4 6.6 4.3 36.6 16.0 16.0 24.0 32.8
Bulgaria 0.8 3.9 3.0 18.4 10.0 10.0 20.0 34.2
Serbia 4.3 4.5 4.1 43.5 12.0 10.0 18.0 39.6
FYROM 2.7 2.5 2.5 27.5 10.0 10.0 18.0 31.6
Albania 7.4 3.3 4.2 59.0 10.0 10.0 20.0 25.6
Turkey 5.5 3.5 3.4 44.0 15 - 35 20.0 18.0 22.7
NATIONAL BANK
Monetary Policy has been the main source of policy accommodation
Strategy & Economic Research Division p.17
SEE-5 & Turkey: Macro Challenges
Policy Rate (%)
0
2
4
6
8
10
12
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-2
-1
0
1
2
3
4
5
Nominal (lhs)Real (ex post , rhs)
Policy Rate (%)
0
1
2
3
4
5
6
7
8
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-8
-6
-4
-2
0
2
4
6Nominal (lhs)Real (ex post , rhs)
Policy Rate (%)
02468
101214161820
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-2
0
2
4
6
8
10Nominal (lhs)Real (ex post , rhs)
Policy Rate (%)
0123456789
10
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-4
-2
0
2
4
6
8
10
12Nominal (lhs)Real (ex post , rhs)
Policy Rate (%)
0
1
2
3
4
5
6
7
8
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
1
2
3
4
5
Nominal (lhs)Real (ex post , rhs)
Policy Rate (%)
0
3
6
9
12
15
18
21
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-6
-4
-2
0
2
4
6
8
10
12
Nominal (lhs)Real (ex post , rhs)
Romania Bulgaria Serbia
FYROM Albania Turkey
NATIONAL BANK
MP has had to keep an eye on the exchange rate
Strategy & Economic Research Division p.18
SEE-5 & Turkey: Macro Challenges
Exchange Rate and CPI-based REER
3,0
3,2
3,4
3,6
3,8
4,0
4,2
4,4
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
90
100
110
120
130
140
150
RON/EUR (lhs)REER (2000=100, rhs)
Exchange Rate and CPI-based REER
1,950
1,952
1,954
1,956
1,958
1,960
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
90
100
110
120
130
140
150
BGN/EUR (lhs)REER (2000=100, rhs)
Exchange Rate and CPI-based REER
6065707580859095
100105110
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
90
100
110
120
130
140
150
160
170
180
RSD/EUR (lhs)REER (2000=100, rhs)
Exchange Rate and CPI-based REER
61,0
61,2
61,4
61,6
61,8
62,0
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
80
85
90
95
100
105
MKD/EUR (lhs)REER (2000=100, rhs)
Exchange Rate and CPI-based REER
120
124
128
132
136
140
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
90
100
110
120
130
140
150
ALL/EUR (lhs)REER (2000=100, rhs)
Exchange Rate and CPI-based REER
1,0
1,2
1,4
1,6
1,8
2,0
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
100
110
120
130
140
150
TRY/USD (lhs)REER (2000=100, rhs)
Romania Bulgaria Serbia
FYROM Albania Turkey
NATIONAL BANK
Monetary policy will face the dilemma of closing a large output gap, while commodity price inflation is on the upswing
Strategy & Economic Research Division p.19
SEE-5 & Turkey: Macro Challenges
Inflation (%)
0
2
4
6
8
10
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
2
4
6
8
10HeadlineCore
Inflation (%)
0
2
4
6
8
10
12
14
16
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
2
4
6
8
10
12
14
16
HeadlineCore
Inflation (%)
0
2
4
6
8
10
12
14
16
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
2
4
6
8
10
12
14
16
HeadlineCore
Inflation (%)
-3
0
3
6
9
12
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
-3
0
3
6
9
12HeadlineCore
Inflation (%)
0
1
2
3
4
5
6
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
1
2
3
4
5
6HeadlineCore
Inflation (%)
0
2
4
6
8
10
12
01
/07
05
/07
09
/07
01
/08
05
/08
09
/08
01
/09
05
/09
09
/09
01
/10
05
/10
09
/10
01
/11
0
2
4
6
8
10
12HeadlineCore
Romania Bulgaria Serbia
FYROM Albania Turkey
NATIONAL BANK
Further progress on structural reforms, key to a high growth rate, stable macroeconomic and financial environment, and resilience to external shocks
Strategy & Economic Research Division p.20
SEE-5 & Turkey: Macro Challenges
EBRD Transition Indicators
0,00,51,01,52,02,53,03,54,04,5
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20002010
EBRD Transition Indicators
0,00,51,01,52,02,53,03,54,04,5
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all-s
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0,00,51,01,52,02,53,03,54,04,5
20002010
EBRD Transition Indicators
0,00,51,01,52,02,53,03,54,04,5
Sm
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0,00,51,01,52,02,53,03,54,04,5
20002010
EBRD Transition Indicators
0,00,51,01,52,02,53,03,54,04,5
Sm
all-s
cale
priv
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Infr
astr
uctu
re
refo
rm
0,00,51,01,52,02,53,03,54,04,5
20002010
EBRD Transition Indicators
0,00,51,01,52,02,53,03,54,04,5
Sm
all-s
cale
priv
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Inst
it.
Infr
astr
uctu
re
refo
rm
0,00,51,01,52,02,53,03,54,04,5
20002010
Romania Bulgaria Serbia
FYROM Albania
NATIONAL BANK
EU membership process acts as a catalyst and provides a much-needed anchor for policy and reform -- efficient absorption of EU funds, another macroeconomic challenge
Strategy & Economic Research Division p.21
SEE-5 & Turkey: Macro Challenges
EU Membership
Turkeyo Candidate country
o Formal opening of Accession negotiations in October 2005
Romania o Member country since January 2007 2009-2013 EU Funds = EUR 31.5bn
Bulgaria o Member country since January 2007 2009-2013 EU Funds = EUR 12.8bn
Serbia
o Potential candidate country
o Signed a Stabilisation and Association Agreement (SAA) in April 2008
o EU member States agreed to start ratification of the SAA in June 2010
o EU Foreign Ministers asked the European Commission to assess the country’s eligibility for candidacy status in October 2010
FYROM
o Candidate country
o Signed a SAA in April 2001
o EU Commission recommended entry talks with FYROM (14 October 2009)
Albania
o Potential candidate country
o Signed a SAA in June 2006
o The European Commission denied Tirana the status of EU candidate in November 2010, considering that accession negotiations should start as soon as the country meets a number of key priorities
NATIONAL BANK Strategy & Economic Research Division