turkey –emerging market

By Group 8Srinath Guhan 1301-223

Siddharth Jindal 1301-215Vaibhav Kango 1301-577

Aditya Vikran Agrawal 1301-304

Charu Sharma 1301-056V Raghavendra 1301-428

*TURKEY –EMERGING MARKET

*Agenda

Introduction about Turkey

Characteristics of an Emerging Market

Economic Development Indicators

Turkey and EU Relation

Economic Performance• Strengths • Weaknesses

Attractiveness Indicators

Economic Forecast

*Introduction

• Turkey which lies in the heart of Europe has literally become the heart of Europe

• Being in a strategic location that links Asia and Europe, Turkey has significant geostrategic importance

• Turkey has world’s 15th largest GDP and 17th largest nominal GDP

• One of the founding members of Organization for Economic Co-operation and Development (OECD) and G-20 major economies

• Turkey is also a member of MINT countries

*Important Events

1923

• Republic of Turkey was established

1963

• Association agreement signed with EEC (European Economic Community)

1995

• Turkey and EU formed Joint Consultative committee proposed by EEC

2005

• New lira currency introduced as six zeroes are stripped from old lira, ending an era in which banknotes were denominated in millions.

• EU membership negotiations officially launched after intense bargaining.

2013

• The EU announces that membership talks with Turkey will restart in November.

*Emerging Market Characteristics

Transitional Economy -

Young and Growing

Population

Underdeveloped

Infrastructure

Increasing Foreign

Investment

*Economic Development IndicatorsIndicator Name Indicator Code 2004 2005 2006

GNI per capita, PPP (current international $)

NY.GNP.PCAP.PP.CD 10150 11390 12860

Population (Total) SP.POP.TOTL 66845635 67743052 68626337

GDP (current US$) NY.GDP.MKTP.CD 3.9217E+11 4.8298E+11 5.309E+11

GDP growth (annual %) NY.GDP.MKTP.KD.ZG 9.36280885 8.40161747 6.8934901

Life expectancy at birth, total (years) SP.DYN.LE00.IN 72.011122 72.4283659 72.8157317

2007 2008 2009 2010 2011 2012

13880 15000 14380 15810 17070 18190

69496513 70363511 71241080 72137546 73058638 73997128

6.4716E+11 7.3034E+11 6.14554E+11 7.31144E+11 7.7478E+11 7.8926E+11

4.66858113 0.658841 -4.82587996 9.156954024 8.7727463 2.23917967

73.1819268 73.5341951 73.87609756 74.21119512 74.5404878

*GDP Growth of Turkey

2004 2005 2006 2007 2008 2009 2010 2011 2012-6

-4

-2

0

2

4

6

8

10

12

GDP Growth(%)

GDP Growth(%)

*FDI Inflows 19

7319

7419

7519

7619

7719

7819

7919

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

110

500000000

1000000000

1500000000

2000000000

2500000000

3000000000

3500000000

*Turkey and EU Relation

*Turkey was associated with EEC (European Economic Committee) in 1963

*European Union was formed in 1993

*The external relationship i.e. JCC (Joint Consulate Committee) of Turkey with EU was formed in 1995

*The violence and the poor status of Turkey was one of the main reasons for non inclusion

*However, the talks are still going on for the inclusion of Turkey into EU

*For Turkey

*The advantages of Turkey being included in EU are:

The Inclusion will unite western Christians and Muslim world as 99.8% of Turkey’s population are Muslims

The inclusion will make EU stable both economically as well as politically

European Military power will increase as Turkey is a member of NATO (North Atlantic Treaty Organization)

The young work force of Turkey will add new flavor to the usually old work force of EU

Turkey is a very large country of around 70 million populations, hence the business prospects for EU will see a considerable growth

*Against Turkey

*The disadvantages of Turkey being included into EU are:

1Most part of Turkey belongs to Asia not EuropeThe possible immigration of Turkish nationals to

other countries in European is a bone of contention amongst most nations

As it is one of the largest countries, other countries are worried that it may command EU in the future

In comparison to the 27 other nations in the EU, Turkey is a poor country. This will result in a significant cost for the EU

* Strengths of Economic Performance

ECONOMIC PERFORMANCE WCY 2013

STRENGTHS Value

Relocation of services 6.3

is not a threat to the future of your economy (Survey)

Relocation of R&D facilities 6.2


Relocation of production 5.7


Resilience of the economy to economic cycles is 6.7

strong (Survey)

Diversification of the economy (industries, export markets, etc.) 6.5

is extensive (Survey)

Tourism receipts (%) 3.6

International tourism receipts as a percentage of GDP

Long-term unemployment 1.7

Percentage of labor force

Direct investment flows inward ($bn) 12.4

US$ billions

Real GDP growth 2.2

Percentage change, based on national currency in constant prices

Exports of commercial services ($bn) 42.1

US$ billions

*Weaknesses of Economic Performance

WEAKNESSES

Employment (%) 33.2

Percentage of population

Consumer price inflation 8.9

Average annual rate

Current account balance (%) -6.0

Percentage of GDP

Direct investment stocks abroad (%) 3.1

Percentage of GDP

Exports of goods (%) 19.3

Percentage of GDP

Direct investment stocks inward (%) 18.0

Percentage of GDP

Trade to GDP ratio 28.4

(Exports + Imports) / (2 * GDP)

GDP per capita 10564.6

US$ per capita

Unemployment rate 9.2

Percentage of labor force

GDP (PPP) per capita 17209.4

Estimates; US$ per capita at purchasing power parity

*Attractiveness Indicators

Turkey - Key Attractiveness Indicators

Dynamism of the economy 80.36

Cost competitiveness 55.36

Skilled workforce 51.79

Business-friendly environment 42.86

Open and positive attitudes 35.71

Access to financing 30.36

Policy stability & predictability 28.57

Competency of government 19.64

Reliable infrastructure 17.86

High educational level 17.86

Effective labor relations 16.07

Quality of corporate governance 7.14

Effective legal environment 5.36

Strong R&D culture 1.79

Competitive tax regime 1.79

*International Assumptions for

Economic Forecast

Economic growth (%)

2012a 2013b 2014b 2015b 2016b 2017b

US GDP 2.2 2.1 2.4 2.3 2.3 2.4

OECD GDP 1.4 1.2 2 2.1 2.2 2.2

EU27 GDP -0.3 -0.4 0.8 1.4 1.5 1.5

World GDP 2.1 2.1 2.7 2.9 2.9 2.9

World trade 2.7 4 5.2 5.4 5.5 5.6

Inflation indicators (% unless otherwise indicated)

US CPI 2.1 2.1 2.4 2.2 2.3 2.3

OECD CPI 2.2 2 2.3 2.3 2.2 2.2

EU27 CPI 2.6 2 2 2.2 2.1 2.2

Manufactures (measured in US$) -0.6 -3 0.7 1.2 1.4 1.8

Oil (Brent; US$/b) 112 106.6 104.8 107.3 110 115

Non-oil commodities (measured in US$) -10.8 -2.3 0.5 -1.4 4 2.2

Financial variables

US$ 3-month commercial paper rate (avg. %) 0.2 0.2 0.2 0.3 1.2 2.2

€ 3 month interbank rate (avg. %) 0.6 0.2 0.4 0.9 1.4 1.8

Exchange rate TL:US$ (avg.) 1.8 1.82 1.88 1.9 1.88 1.86

Exchange rate US$:€ (avg.) 1.29 1.31 1.29 1.27 1.26 1.26

*Forecast Summary

Forecast Summary2012a 2013b 2014b 2015b 2016b 2017b

Real GDP growth 2.2 3.5 5 5.1 5 4.9

Industrial production growth 2.4 3.5 5 5.5 5 4.5

Gross fixed investment growth -2.5 3.5 7.5 8 8 8

Unemployment rate (avg.) 9.2 9 8.2 7.1 7 6.3

Consumer price inflation (avg.) 8.9 7.4 6.7 5.3 4.9 4.4

Consumer price inflation (end-period) 6.2 7.3 6.3 5.4 4.6 4.1

Short-term interbank rate 5 5 5 5 5.5 5.8

Government balance (% of GDP) -2 -2.8 -2.9 -2.7 -2.2 -2.3

Exports of goods fob (US$ bn) 163.4 167.2 180 194.6 213.5 233.9

Imports of goods fob (US$ bn) 228.9 240.6 260.1 282.8 311.5 342.2

Current-account balance (US$ bn) -48.9 -56.2 -62.6 -69.4 -77.3 -86.6

Current-account balance (% of GDP) -6.2 -6.5 -6.7 -6.9 -6.9 -7

External debt (end-period; US$ bn) 336.9 347.8 363.8 378.6 398.7 420.2

Exchange rate TL:US$ (avg.) 1.796 1.818 1.882 1.905 1.881 1.863

Exchange rate TL:US$ (end-period) 1.782 1.831 1.921 1.895 1.876 1.858

Exchange rate TL:¥100 (avg.) 2.251 1.934 1.976 1.979 1.929 1.93

Exchange rate TL:€ (avg.) 2.309 2.409 2.47 2.419 2.37 2.353

*Trend Charts

*Major Indicators

Politics

Economy

External Sector

Unemployment rate

Monitory Policy outlook

Manufacturing Sector

*Thank You!