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Turkish Economy : An Overview

N. Kamuran MALATYALI

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Presentation Outline

Once Upon a Time : Land of Crises Anti-Inflationary Programme

Paving the Road Structural Shift 2008 Syndrome

New Global Environment Wuthering Heights Turkey : A Hub with Relative Stability?

Once Upon A Time – Land of Crises

Turkish Economy Experienced Hard Times During the Previous Century

Between 1924-2001 (78 years) the number of (-) growth years: 14

(1927, 1932, 1935, 1940, 1941, 1944, 1945, 1949, 1954, 1979, 1980, 1994, 1999, 2001)

Recurring crises every 5.5 years, on the average

Long run average growth rate of the economy: %4.4

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Once Upon A Time – Land of Crises

1990s were nightmare with respect to any indicator

Sustainability was the real issue High Public Sector Borrowing Requirement

=> High Domestic Borrowing => High and volatile inflation + High Interest Rates + High rates of depreciation

Recurring Deep Crises: 1994, 1999 Volatility in Growth

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Borrowing Requirement and Debt Stock

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Real Rate of Interest

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Growth and Contraction

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Once Upon A Time – Anti-Inflationary Programme

To restore stability - Disinflation Programme of 2000 : Failure

2001 February Crisis Transition to the Strong Economy

Programme : Comprehensive restructuring (privatization, free market regulations), free float, sustainability in public finance, banking system rehabilitation

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Paving the Road – Structural Shift

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Real Rates of Interest

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Increased Welfare

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Contained Debt Risk

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Paving the Road – 2008 Syndrome

2008 Global Crisis Deeply Affected the World

It is still under way

2001 Crisis of Turkey (collapse of the banking system and its rehabilitation) shielded Turkey in 2008.

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2008 Syndrome - Growth of the World Economy

2008 Syndrome - World Trade Volume (% Change)

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2008 Syndrome – Turkish Current Account Balance

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2008 Syndrome - Paving the Road

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New Global Environment

Things are pretty different beginning by 2008

System seeks shelter and a stable ground

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Debt Stock/GDP (EU Definition)EU Definition of Debt Stock in EU Member Countries / GDP (%)                     2005 2006 2007 2008 2009 2010Euro Zone (17 Count.)) 70 68.4 66.2 69.9 79.3 85.1EU(27 Countries) 62.8 61.5 59 62.3 74.4 80Greece 100 106.1 105.4 110.7 127.1 142.8Italy 105.9 106.6 103.6 106.3 116.1 119Belçgium 92.1 88.1 84.2 89.6 96.2 96.8Portugal 62.8 63.9 68.3 71.6 83 93Germany 68 67.6 64.9 66.3 73.5 83.2France 66.4 63.7 63.9 67.7 78.3 81.7Hungary 61.8 65.7 66.1 72.3 78.4 80.2UK 42.5 43.4 44.5 54.4 69.6 80Austria 64.6 62.8 60.7 63.8 69.6 72.3Netherlands 51.8 47.4 45.3 58.2 60.8 62.7Spain 43 43 36.1 39.8 53.3 60.1Turkey 52.7 46.5 39.9 40 46.1 42.2

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Euro Imports of Goods and Services (% Change)

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World Trade Volume (% Change)

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Pre-and Post-Growth Performance of the Global Crisis

WorldAdvanced EconomiesEmerging and Developing Economies

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Turkish economy benefited from the positive global climate.

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Growth in the World Economy

Growth Performance

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World Advanced Emerging

Turkey : A Hub with Relative Stability?

Things have changed Turkey has increased degree of

openness Stabilized economic structure Foreign participation

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AVERAGE GDP GROWTH RATES IN TURKEY OVER PERIODS

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Development in the Measure of Openness of Turkey

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Growth Performance of Developing Economies

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Central and Eastern Europe

Middle East and North Europe

Emerging Asia

Sub-Saharan Africa

Latin America and the Caribbean

IMF Growth Projections

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WorldAdvanced EconomiesEmerging and Developing Economies

Growth in Advanced Economies

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Euro-zone G-7 Economies

Growth Comparisons

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Emerging and Developing Economies

Turkey_IMF

Turkey_OVP

General Government Gross Debt / GDP

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Advanced Economies Emerging Economies Turkey

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Growth Performance of Developing Economies, and Turkey

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Private Capital Flows towards Emerging Economies

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Current Account Deficit in Economies Similar To Turkey

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Emerging and Developing Economies Central and East Europe Turkey(IMF) Turkey(OVP)

Paving the Road – Structural Shift

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Periodic Growth Rates of the World Economy

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Current Account Deficit and Fund Flows