Kibritçioğlu, November 8, 2004, (1/81)
Evaluation of Macroeconomic Evaluation of Macroeconomic Developments in TurkeyDevelopments in Turkeywith special focus on the real exchange rate with special focus on the real exchange rate misalignmentmisalignment
Aykut KibritçioğluAykut KibritçioğluAssociate Professor of EconomicsAnkara University, TurkeyTel.: (+90-312) 319 77 20, ext. 340Fax: (+90-312) 319 77 36E-Mail: [email protected] Homepage: http://dialup.ankara.edu.tr/~kibritci/wiiw.html
Vienna, November 11, 2004
Kibritçioğlu, November 8, 2004, (2/81)
The 1980-1989 TransformationThe 1980-1989 TransformationThe 1980-1989 TransformationThe 1980-1989 Transformation
1978 - 1980:1978 - 1980: Balance-of-payments crisis, productivity slowdown and accelerating inflation
January 1980:January 1980: Announcement of a substantial stabilization and structural adjustment program in order to gradually liberalize the economy
1980 - 1982:1980 - 1982: Domestic financial liberalization
May 1981:May 1981: Abandonment of the fixed exchange-rate regime
June 1984 June 1984 -- August 1989: August 1989: Capital account liberalization and convertibility of the Turkish lira
Post-1989 Macroeconomic DevelopmentsPost-1989 Macroeconomic DevelopmentsPost-1989 Macroeconomic DevelopmentsPost-1989 Macroeconomic Developments
December 1993 - April 1994:December 1993 - April 1994: A major currency crisis and acceleration in the inflation
August 1999:August 1999: Negative macroeconomic impacts of the Marmara earthquake
December 1999:December 1999: Announcement of an exchange-rate-based stabilization program for 2000-2002
November 2000 & February 2001:November 2000 & February 2001: Two successive banking and currency crises and political instability in Turkey
May 2001:May 2001: Announcement of the new economic program
Kibritçioğlu, November 8, 2004, (3/81)
““Turkey suffers from severe macroeconomic Turkey suffers from severe macroeconomic imbalances since late 1970s.”imbalances since late 1970s.”
MACROECONOMIC MACROECONOMIC ENVIRONMENTENVIRONMENT
(1978 – 2001)(1978 – 2001)
Political instability
Volatile economic growth
High and persistent inflation
Inflation-depreciation spiral
Strong “currency substitution”
Volatile short-term capital flows
Large current account deficits
Fragile banking sector
Public sector deficits
External shocks (oil prices, etc.)
Moral hazard problems
REAL SECTOR,REAL SECTOR,BANKING &BANKING &CURRENCYCURRENCYCRISESCRISES
January 1980
1982-1985
Early 1994
November 2000 – February 2001
Kibritçioğlu, November 8, 2004, (4/81)
Research Visit to the WIIW(Vienna, Austria, November 1-15, 2004)Research Visit to the WIIW(Vienna, Austria, November 1-15, 2004)
“An Analysis of Early Warning Signals of Currency Crises in Turkey, 1986-2004”
“Real Exchange Rate Misalignment in Turkey, 1987-2003”
“An Overview of Macroeconomic Developments in Turkey”(with special reference to the AK-Party Era, 2002-04)
http://dialup.ankara.edu.tr/~kibritci/http://dialup.ankara.edu.tr/~kibritci/wiiw.htmlwiiw.html
Kibritçioğlu, November 8, 2004, (5/81)
Particularly the following signals are the most important
early warning signals of currency crises that may occur
within coming 12 months: a falling ratio of exports to imports below 56
percent a sharp worsening in order-expectations of
Turkish exporters a significant (more than 6.8, 5.8 or 5.1 percent)
real appreciation of the Turkish lira against foreign currencies
a real interest rate differential more than –5.1 percent
an annual increase in crude-oil prices which is higher than 55.6 percent
a sharp fall in ISE’s National 100 index that exceeds 17.5 percent per month
Signals Approach for TurkeySignals Approach for Turkey
Kibritçioğlu, November 8, 2004, (6/81)
Real Exchange Rate MisalignmentReal Exchange Rate Misalignmentin Turkey, 1987-2003in Turkey, 1987-2003
Policy makers and many researchers are interested in predicting and monitoring misalignment (M) in the foreign exchange market, because, in many cases, it is closely related to possible current account problems or impending currency crises.
M = ? Definition?
Kibritçioğlu, November 8, 2004, (7/81)
Real Exchange Rate MisalignmentReal Exchange Rate Misalignmentin Turkey, 1987-2003in Turkey, 1987-2003
Real exchange rate misalignment (M) measures deviations of actual real exchange rate (A) from its long-run, or equilibrium, level (E): M = (A – E) / E
M > 0 => TL is depreciated in real termsM = 0 => A is a “realistic” exchange rateM < 0 => TL is appreciated in real terms
Attention: A is an “observable” variable, while E is a “non-observable” one!
Kibritçioğlu, November 8, 2004, (8/81)
T w o -G o od sIn ternal Real
Exchan geRate
T hree-G oo dsIn ternal Real
Exchan geRate
In ternalReal ER
Bilateral
M u ltilateral
PPP-BasedExternal Real ER
M u nd ell-F lem ing -T yp e Real ER
(T erm s-o f-T rade)
ExternalReal ER
A ctua lRea l E R
T im e-In d epen den t(co nstan t)
T im e-Varying(variab le)
PPP-BasedEqu ilib rium RER
F BERERDerived from a
S in g le-Eq uationM o del
F BERERDerived from aM u lti-Equ atio n
M o del
F un dam en tals-BasedEqu ilib rium RER
L ong-RunRea l E R
Real Exchange Rates: Conceptual Classification
Kibritçioğlu, November 8, 2004, (9/81)
Real Exchange Rate MisalignmentReal Exchange Rate Misalignmentin Turkey, 1987-2003in Turkey, 1987-2003
This study mainly aims to discuss the sensitivity of estimation results to the alternative combinations of actual real exchange rate indices (A) and equilibrium definitions (E), by using quarterly data from 1987 to 2003 for Turkish lira.
The 16 measures of misalignment employed in this study show that the differences between these alternative measures vary between 6.5 and 36.5 percent points, which actually is a very strong indication for high sensitivity of the degree of misalignment to the selected combination of the A and E values.
Kibritçioğlu, November 8, 2004, (10/81)
65
75
85
95
105
115
125
135
145
19
95
q1
19
95
q3
19
96
q1
19
96
q3
19
97
q1
19
97
q3
19
98
q1
19
98
q3
19
99
q1
19
99
q3
20
00
q1
20
00
q3
20
01
q1
20
01
q3
20
02
q1
20
02
q3
20
03
q1
20
03
q3
20
04
q1
20
04
q3
1995 = 100
A1 (K&K)
A2 (TNT)
A3 (Reuters)
A4 (SPO)
CBRT-CPI
CBRT-WPI
JPM
Increase: DepreciationDecrease: Appreciation
notincludedin thesampleperiod
Actual Real Exchange Rates (A): Alternatives
1995=100, 1995.I – 2003.III
Kibritçioğlu, November 8, 2004, (11/81)
1995=100, 1987.I – 2003.III
Actual Real Exchange Rates (A): Selected A’s
65
75
85
95
105
115
125
135
145
1987
q1
1988
q1
1989
q1
1990
q1
1991
q1
1992
q1
1993
q1
1994
q1
1995
q1
1996
q1
1997
q1
1998
q1
1999
q1
2000
q1
2001
q1
2002
q1
2003
q1
1995 = 100A1 (K&K)
A2 (TNT)A3 (Reuters)
A4 (SPO)
Increase: DepreciationDecrease: Appreciation
Kibritçioğlu, November 8, 2004, (12/81)
A1: Trade-Weighted Real Effective Real Exchange Rate 1995=100; for 8 countries; PT Σ eWPIf , PN CPId ; A1 =
PT/PN . Source: SIS, CBRT and IMF’s IFS; authors’ calculations.
A2: Internal (TNT) Real Exchange Rate Index1995=100; derived by using implicit price deflators calculatedfrom GDP accounts: PT ( Px+ Pm) and PN Py-x+m ;A2 = PT / PN .Source: SIS and CBRT; authors’ calculations; deseasonalized.
A3: Reuters’ TRTWIN IndexJune 1999 = 100; for four countries; trade-weighted.Source: Reuters; the inverse of the original index; base year adjusted as 1995=100.
A4: SPO’s Real Effective Real Exchange Rate IndexJan. 1982 = 100; USD: 75% & Euro: 25%; for USA & Euro areaPPI and for Turkey WPI.Source: SPO; the inverse of the original index; base year adjusted as 1995=100.
Actual Real Exchange Rates (A): Properties
Kibritçioğlu, November 8, 2004, (13/81)
Real Exchange Rate Misalignment (M)
A1 A2 A3 A4
E1 M11=(A1–E11)/E11
M12=(A2–E12)/E12
M13=(A3–E13)/E13
M14=(A4–E14)/E14
E2 M21=(A1–E21)/E21
M22=(A2–E22)/E22
M23=(A3–E23)/E23
M24=(A4–E24)/E24
E3 M31=(A1–E31)/E31
M32=(A2–E32)/E32
M33=(A3–E33)/E33
M34=(A4–E34)/E34
E4 M41=(A1–E41)/E41
M42=(A2–E42)/E42
M43=(A3–E43)/E43
M44=(A4–E44)/E44
16 Different Measures of Misalignment According to 4 Different Actual Real Exchange Rate Indices and 4 Different Equilibrium Definitions
Kibritçioğlu, November 8, 2004, (14/81)
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
35
40
1987
q1
1988
q1
1989
q1
1990
q1
1991
q1
1992
q1
1993
q1
1994
q1
1995
q1
1996
q1
1997
q1
1998
q1
1999
q1
2000
q1
2001
q1
2002
q1
2003
q1
Maximum Misalignment
No Misalignment (Equilibrium)
Minimum Misalignment
M > 0 => Real DepreciationM < 0 => Real Appreciation
Degree of Differences between 16 M Measures
Kibritçioğlu, November 8, 2004, (15/81)
Degree of Real Appreciation of the Turkish liraprior to 1994 & 2001 Currency Crises (%)
Negative signed figures above indicate the degree of real appreciation of the Turkish lira, while positive ones imply a real depreciation. That is, negative-signed figures show to what extent the relevant A index is below its equilibrium level, and vice versa.
M11 M12 M13 M14
1993 (annual average) -18.0 -16.2 -11.1 -12.4
2000 (annual average) -24.1 -16.1 -9.7 6.0
2003.I -12.9 -13.1 -9.7 0.6
2003.II -22.7 -24.3 -17.9 -10.4
2003.III -29.7 -32.6 -22.9 -15.2
2003 (annual average) -21.8 -23.3 -16.8 -8.3
M21 M22 M23 M24
1993 (annual average) -12.5 -10.5 -6.2 -6.3
2000 (annual average) -10.2 -5.0 -5.2 -3.1
2003.I 5.6 6.3 -0.4 -4.5
2003.II -6.0 -6.6 -8.7 -14.2
2003.III -14.1 -16.0 -13.7 -18.1
2003 (annual average) -4.8 -5.4 -7.6 -12.3
M31 M32 M33 M34
1993 (annual average) -15.4 -14.2 -5.8 -4.5
2000 (annual average) -14.0 -8.1 -6.1 -3.2
2003.I -1.4 -4.8 -5.3 -8.4
2003.II -14.7 -18.2 -12.4 -13.9
2003.III -22.0 -26.8 -17.2 -18.5
2003 (annual average) -12.7 -16.6 -11.6 -13.6
M41 M42 M43 M44
1993 (annual average) -15.1 -13.8 -5.2 -4.9
2000 (annual average) -14.5 -8.7 -6.5 -2.9
2003.I -1.6 -4.4 -4.0 -6.7
2003.II -12.8 -16.8 -12.4 -16.7
2003.III -20.7 -25.9 -17.6 -21.1
2003 (annual average) -11.7 -15.7 -11.3 -14.8
The Relation between Misalignment and Currency Crises
Kibritçioğlu, November 8, 2004, (16/81)
60
70
80
90
100
110
120
130
140
1986
,01
1987
,01
1988
,01
1989
,01
1990
,01
1991
,01
1992
,01
1993
,01
1994
,01
1995
,01
1996
,01
1997
,01
1998
,01
1999
,01
2000
,01
2001
,01
2002
,01
2003
,01
2004
,01
Areu
Aspo
Ajpm
Acbcpi
Acbwpi
Actual Real Exchange Rates (A): Monthly Data
Kibritçioğlu, November 8, 2004, (17/81)
Real Exchange Rate Misalignment (M): Monthly Data
9.1
3.1
-20
-15
-10
-5
0
5
10
15
20
25
30
19
95
.01
19
95
.07
19
96
.01
19
96
.07
19
97
.01
19
97
.07
19
98
.01
19
98
.07
19
99
.01
19
99
.07
20
00
.01
20
00
.07
20
01
.01
20
01
.07
20
02
.01
20
02
.07
20
03
.01
20
03
.07
20
04
.01
20
04
.07
MSPO
MCBC
MCBW
MREU
MJPM
M > 0 => Real DepreciationM < 0 => Real Appreciation
Kibritçioğlu, November 8, 2004, (18/81)
Kibritçioğlu, November 8, 2004, (19/81)
RecentRecentMaMacroeconomiccroeconomicDevelopmentsDevelopments
in Turkeyin Turkey
Kibritçioğlu, November 8, 2004, (20/81)
Governments & Political InstabilityGovernments & Political Instabilityin Turkeyin Turkey, 1969-2004, 1969-2004
1969-2004 = 36 years = 432 months Average period between two general elections = 48
months = 4 years Average life of governments = 15.4 months = 1.3 years
(ICRG=International Country Risk Guide; a declining PR index indicates an increase in the political risk.)
The Frequency of General Elections and Government Changes in Turkey (Jan. 1969 - Dec. 2004)
19
69
.01
19
70
.01
19
71
.01
19
72
.01
19
73
.01
19
74
.01
19
75
.01
19
76
.01
19
77
.01
19
78
.01
19
79
.01
19
80
.01
19
81
.01
19
82
.01
19
83
.01
19
84
.01
19
85
.01
19
86
.01
19
87
.01
19
88
.01
19
89
.01
19
90
.01
19
91
.01
19
92
.01
19
93
.01
19
94
.01
19
95
.01
19
96
.01
19
97
.01
19
98
.01
19
99
.01
20
00
.01
20
01
.01
20
02
.01
20
03
.01
20
04
.01
35
40
45
50
55
60
65
70
75
Government Changes (28 times) ICRG's Political Risk Index for Turkey General Elections (9 times)
Kibritçioğlu, November 8, 2004, (21/81)
Kibritçioğlu, November 8, 2004, (22/81)
Market for Goods:Market for Goods:Inflation & DisinflationInflation & Disinflation
Kibritçioğlu, November 8, 2004, (23/81)
Turkey suffered from high and persistent inflation since more than three decades. But, finally, it’s declining now...
Annual & Monthly Consumer Price Inflation (%, Feb.1969-Sep.2004)
-5
5
15
25
35
45
55
65
75
85
95
105
115
125
135
14519
69.0
119
70.0
119
71.0
119
72.0
119
73.0
119
74.0
119
75.0
119
76.0
119
77.0
119
78.0
119
79.0
119
80.0
119
81.0
119
82.0
119
83.0
119
84.0
119
85.0
119
86.0
119
87.0
119
88.0
119
89.0
119
90.0
119
91.0
119
92.0
119
93.0
119
94.0
119
95.0
119
96.0
119
97.0
119
98.0
119
99.0
120
00.0
120
01.0
120
02.0
120
03.0
120
04.0
1
monthly
annual
Kibritçioğlu, November 8, 2004, (24/81)
Annual inflation rates fell below 15 percent as end of September 2004. (Official target for Dec. 2004: 12 percent)
Inflationary expectations in the country are also changing in a positive direction.
Annual Changes in Wholesale and Consumer Price Indices (SIS, percent)
11.9
7.50
10
20
30
40
50
60
70
80
90
1998
.01
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events WPI CPI
Kibritçioğlu, November 8, 2004, (25/81)
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Market for Goods:Market for Goods:Production & Production & ProductivityProductivity
Kibritçioğlu, November 8, 2004, (27/81)
Indicators of Long-Run Growth in Turkey
Turkey’s economic growth performance was highly volatile since 1950.
1.52.9
7414
340-15
-10
-5
0
5
10
15
20
25
30
19
50
19
51
19
52
19
53
19
54
19
55
19
56
19
57
19
58
19
59
19
60
19
61
19
62
19
63
19
64
19
65
19
66
19
67
19
68
19
69
19
70
19
71
19
72
19
73
19
74
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
0
1000
2000
3000
4000
5000
6000
7000
8000
Growth in Real GDP ($) Per Capita, %
Population Growth, %
Real GDP (TL) Growth, %
Real GDP ($) per Capita [right axis]
PWT6.1
Kibritçioğlu, November 8, 2004, (28/81)
GDP per capita ($): Turkey & Selected Countries
In an international context, however, Turkey’s economic growth performance is relatively poor.
1000
6000
11000
16000
21000
26000
3100019
50
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
USA
Japan
Germany
UK
Israel
Cyprus
South Korea
Greece
Hungary
Turkey
Romania
PWT6.1
Kibritçioğlu, November 8, 2004, (29/81)
In recent years, growth rate of the real GDP has significantly fluctuated.
The Turkish real sector is recovering from the 2000-2001 crisis, which is one of the four deepest economic crises after 1950.
Annual Real GDP Growth (SIS, percent)
13.4
-12-9-6-30369
1215
19
98
Q1
19
98
Q2
19
98
Q3
19
98
Q4
19
99
Q1
19
99
Q2
19
99
Q3
19
99
Q4
20
00
Q1
20
00
Q2
20
00
Q3
20
00
Q4
20
01
Q1
20
01
Q2
20
01
Q3
20
01
Q4
20
02
Q1
20
02
Q2
20
02
Q3
20
02
Q4
20
03
Q1
20
03
Q2
20
03
Q3
20
03
Q4
20
04
Q1
20
04
Q2
20
04
Q3
20
04
Q4
Kibritçioğlu, November 8, 2004, (30/81)
50
100
150
200
250
300
350
400
450
500
550
600
650
700
75019
80
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
South Korea
Turkey
Israel
USA
Cyprus
Hungary
Japan
UK
Industrial Countries
Germany
Greece
Romania
Industrial Production Index (1980=100)
Turkish industrial sector demonstrated a remarkable growth performance since 1980.
Kibritçioğlu, November 8, 2004, (31/81)
Annual increases in the industrial production index sharply fluctuate around an average annual growth of 10 percent, during the AK-Party era.
Annual Increases in the Industrial Production Index (SIS, %)
-20-15-10
-505
1015202530
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
mov.ave.
Kibritçioğlu, November 8, 2004, (32/81)
Capacity utilization ratio in manufacturing industry also increased up to the pre-crisis level in recent months.
Capacity Utilization Ratio in Manufacturing Industry (SIS, %)84.8
68707274767880828486
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Kibritçioğlu, November 8, 2004, (33/81)
The manufactuing industry exhibits a remarkable increase in labor productivity.
The reasons for that are still not investigated by economists sufficiently.
Partial Productivity per Worker in Manufacturing Industry (1997=100)
90
100
110
120
130
140
150
160
19
98
Q1
19
98
Q2
19
98
Q3
19
98
Q4
19
99
Q1
19
99
Q2
19
99
Q3
19
99
Q4
20
00
Q1
20
00
Q2
20
00
Q3
20
00
Q4
20
01
Q1
20
01
Q2
20
01
Q3
20
01
Q4
20
02
Q1
20
02
Q2
20
02
Q3
20
02
Q4
20
03
Q1
20
03
Q2
20
03
Q3
20
03
Q4
20
04
Q1
20
04
Q2
20
04
Q3
20
04
Q4
Kibritçioğlu, November 8, 2004, (34/81)
Kibritçioğlu, November 8, 2004, (35/81)
Labor Market:Labor Market:Employment &Employment &
Real WagesReal Wages
Kibritçioğlu, November 8, 2004, (36/81)
The increases in manufacturing production are not fully accommodated by increases in employment.
Turkey has still to solve the unemployment problem that has been deepened after the 2000-2001 financial crisis.
Employment Index for the Manufacturing Industry (1997=100)
75
80
85
90
95
100
105
19
98
Q1
19
98
Q2
19
98
Q3
19
98
Q4
19
99
Q1
19
99
Q2
19
99
Q3
19
99
Q4
20
00
Q1
20
00
Q2
20
00
Q3
20
00
Q4
20
01
Q1
20
01
Q2
20
01
Q3
20
01
Q4
20
02
Q1
20
02
Q2
20
02
Q3
20
02
Q4
20
03
Q1
20
03
Q2
20
03
Q3
20
03
Q4
20
04
Q1
20
04
Q2
20
04
Q3
20
04
Q4
mov.ave.
Kibritçioğlu, November 8, 2004, (37/81)
Real wages in manufacturing industry declined significantly following the 2000-2001 crisis.
They shrinked about 18 percent during the crisis.
Real-Wage per Hour-Worked in Manufacturing Industry (1997=100)
80
85
90
95
100
105
110
115
120
19
98
Q1
19
98
Q2
19
98
Q3
19
98
Q4
19
99
Q1
19
99
Q2
19
99
Q3
19
99
Q4
20
00
Q1
20
00
Q2
20
00
Q3
20
00
Q4
20
01
Q1
20
01
Q2
20
01
Q3
20
01
Q4
20
02
Q1
20
02
Q2
20
02
Q3
20
02
Q4
20
03
Q1
20
03
Q2
20
03
Q3
20
03
Q4
20
04
Q1
20
04
Q2
20
04
Q3
20
04
Q4
Kibritçioğlu, November 8, 2004, (38/81)
Kibritçioğlu, November 8, 2004, (39/81)
Foreign Exchange Foreign Exchange Market:Market:
Exchange Rates, and Exchange Rates, and Currency SubstitutionCurrency Substitution
Kibritçioğlu, November 8, 2004, (40/81)
Since May 1981, Turkey has a relatively flexible exchange rate system. This gradually removed the “black-market” for FX in Turkey.
In 2000, the monthly growth rates of nominal exchange rates were pre-determined to gradually disinflate the economy.
0
1
2
3
4
5
6
7
8
9
50.0
1
52.0
1
54.0
1
56.0
1
58.0
1
60.0
1
62.0
1
64.0
1
66.0
1
68.0
1
70.0
1
72.0
1
74.0
1
76.0
1
78.0
1
80.0
1
82.0
1
84.0
1
86.0
1
88.0
1
90.0
1
92.0
1
94.0
1
96.0
1
98.0
1
00.0
1
02.0
1
04.0
1
-35
0
35
70
105
140
175
210
245BMER / OER (left axis) Annual Increases in OER (right axis)
“Black-Market” Exchange Rates (BMER) vs. Official Exchange Rates (OER)and Annual Increases in OER (1950-2004)
Kibritçioğlu, November 8, 2004, (41/81)
Note that annual growth rate of nominal USD exchange rates turned to negative values between May 2003 and April 2004.
Annual Changes in Nominal Exchange Rates (percent)
5.4
9.9
-30
-15
0
15
30
45
60
75
90
105
120
135
150
1998
.01
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events TL/USD Exchange Rate TL/Euro Exchange Rate
Kibritçioğlu, November 8, 2004, (42/81)
Following the 2000-2001 crisis, gross FX reserves of the Turkish Central Bank increased significantly.
They are now about 38 percent higher than the level of reserves prior to the crisis.
Central Bank's Gross Foreign Exchange Reserves (billion USD)
33.7
15
18
21
24
27
30
33
36
19
98
.01
19
98
.04
19
98
.07
19
98
.10
19
99
.01
19
99
.04
19
99
.07
19
99
.10
20
00
.01
20
00
.04
20
00
.07
20
00
.10
20
01
.01
20
01
.04
20
01
.07
20
01
.10
20
02
.01
20
02
.04
20
02
.07
20
02
.10
20
03
.01
20
03
.04
20
03
.07
20
03
.10
20
04
.01
20
04
.04
20
04
.07
20
04
.10
October 2000 level
Kibritçioğlu, November 8, 2004, (43/81)
There is a tendency towards reverse currency substitution during the AK-Party era.
Government’s success in disinflating the economy and its increasing credibility may significantly be contributing to this process.
Two Indicators of Currency Substitution in Turkey (%)
30
50
70
90
110
130
15019
98.0
1
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events Foreign Exchange Deposits / TL-denominated Deposits (M2Y - M2) / M2
Kibritçioğlu, November 8, 2004, (44/81)
Kibritçioğlu, November 8, 2004, (45/81)
Balance of Balance of Payments and Payments and External DebtsExternal Debts
Kibritçioğlu, November 8, 2004, (46/81)
0
10
20
30
40
50
60
70
80
90
100
110
1925
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
Custom Duties / Imports (%) Taxes on Foreign Trade / Imports (%)
History of Taxation in Turkish International Trade in Goods (1925-2002)
Ken
ned
y (196
7)
To
kyo
(1979)
Uru
gu
ay (1986-
1993)
GA
TT
(194
7)
Cu
stom
s Un
ion
with
the E
U
(1996)
Foreign trade liberalization in Turkey is closely associated to Turkey’s relations to the GATT/WTO and the European Union (EU).
Kibritçioğlu, November 8, 2004, (47/81)
Exports to Imports Ratio in Turkey (1950-2004, monthly)
The share of the agricultural products on exports decreased in Turkey, and the volatility of exports to imports ratio in Turkey declined since early 1980s.
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
50.0
1
52.0
1
54.0
1
56.0
1
58.0
1
60.0
1
62.0
1
64.0
1
66.0
1
68.0
1
70.0
1
72.0
1
74.0
1
76.0
1
78.0
1
80.0
1
82.0
1
84.0
1
86.0
1
88.0
1
90.0
1
92.0
1
94.0
1
96.0
1
98.0
1
00.0
1
02.0
1
04.0
1
mov.ave.
Kibritçioğlu, November 8, 2004, (48/81)
The developments in the exports to imports ratio show that foreign trade deficits are increasing since early 2002.
Exports to Imports Ratio (SIS, percent, as of 12-monthly totals)
64.4
73.6
4550556065707580859095
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
manufacturing
total
Kibritçioğlu, November 8, 2004, (49/81)
Export and Import Price Indices(1982=100, monthly averages)
70
80
90
100
110
120
130
1982
.12
1983
.12
1984
.12
1985
.12
1986
.12
1987
.12
1988
.12
1989
.12
1990
.12
1991
.12
1992
.12
1993
.12
1994
.12
1995
.12
1996
.12
1997
.12
1998
.12
1999
.12
2000
.12
2001
.12
2002
.12
2003
.12
2004
.12
External Terms of Trade Export Price Index Import Price Index 1982=100
Kibritçioğlu, November 8, 2004, (50/81)
Goods Composition of Turkish Exports and Imports(1969-2003, ISIC, percent)
Exports Imports
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Agriculture
ManufacturingMining &
Quarrying
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Agriculture
Manufacturing
Mining & Quarrying
Kibritçioğlu, November 8, 2004, (51/81)
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
19
69
19
71
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
Consumption Goods
Intermediate Goods
Inv.G.
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
19
69
19
71
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
Consumption Goods
Intermediate Goods
Investment Goods
Goods Composition of Turkish Exports and Imports(1969-2003, BEC, percent)
Exports Imports
Kibritçioğlu, November 8, 2004, (52/81)
0
10
20
30
40
50
60
70
80
90
100
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Other Countries
Developing Western Hemisphere
Developing Middle East
Developing Europe
Developing Asia
Developing Africa
EU15
Industrial Countries (excl. EU15)
Country Composition of Turkish Exports (1980-2003, percent)
Kibritçioğlu, November 8, 2004, (53/81)
Country Composition of Turkish Imports (1980-2003, percent)
0
10
20
30
40
50
60
70
80
90
100
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Other Countries
Developing Western Hemisphere
Developing Middle East
Developing Europe
Developing Asia
Developing Africa
EU15
Industrial Countries (excl. EU15)
Kibritçioğlu, November 8, 2004, (54/81)
The increasing deficit in net exports of goods is eliminated by an increasing surplus in net exports of services, and hence the CAB deficits are declining since March 2004.
Current Account Balance: Selected Indicators (SIS, billion USD, monthly)
-2.60
-1.95
-1.30
-0.65
0.00
0.65
1.301
99
8.0
1
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Selected Events Net Exports of Goods (billion TL)
Net Exports of Goods and Services (billion TL) Current Account Balance (billion TL)
Kibritçioğlu, November 8, 2004, (55/81)
Current Account Balance: Selected Indicators (SIS, billion USD, cumulative)
-21.9
-9.8
-12.3
-24
-20
-16
-12
-8
-4
0
4
8
1998
.01
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events Net Exports of Goods (billion TL)
Net Exports of Goods and Services (billion TL) Current Account Balance (billion TL)
However, the cumulative BoP data shows that the recent improvements have not fully translated into the annual data yet.
In 2003, the CAB/GDP ratio amounted to -2.8%. However, it will possibly climb to -4% in 2004.
Kibritçioğlu, November 8, 2004, (56/81)
-12
-10
-8
-6
-4
-2
0
2
4
6
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Erratic Nature of Net Short-Term Capital Inflows(billion USD, annual data)
capitalcapitalaccountaccount
liberalizationliberalization
capitalcapitalaccountaccount
liberalizationliberalization
19941994crisiscrisis19941994crisiscrisis
2000-012000-01crisiscrisis
2000-012000-01crisiscrisis
Kibritçioğlu, November 8, 2004, (57/81)
The effects of both current and capital account liberalizations realized in the 1980s can roughly be followed by the fluctuations in the CAB to GDP and net short term capital inflows to GDP ratios.
Current Account Balance to GDP & Net Short-Term Capital Inflows to GDP (%)
-9
-8
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
CAB to GDP Net Short-Term Capital Inflows to GDP
currentaccountliberalization
capitalaccount
liberalization
Kibritçioğlu, November 8, 2004, (58/81)
The monthly data shows that the volatility of the CAB to nominal industrial output is significantly lower than that of the net short-term capital inflows to output ratio.
Current Account Balance to Output & Net Short-Term Capital Inflows to Output(January 1999 = 1.0; as of 12-monthly cummulatives)
-2.8
2.11.0
-25
-20
-15
-10
-5
0
5
10
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Selected Events Current Account Balance to Output Net Short-Term Capital Inflows to Output
Kibritçioğlu, November 8, 2004, (59/81)
Political Process(Voters, Political Parties &
Bureaucrats)
Political Process(Voters, Political Parties &
Bureaucrats)
““Hot Money” Mechanism in Hot Money” Mechanism in TurkeyTurkey
High Public Sector Deficits
High Public Sector Deficits
High Real International Interest
Rate Differential
High Real International Interest
Rate Differential
Decreasing or Stable Nominal Exchange
Rates
Decreasing or Stable Nominal Exchange
Rates
Net Short-TermCapital Inflows from Abroad
Net Short-TermCapital Inflows from Abroad
interest rate parityinterest rate parity
......
It‘s not only “capital account
liberalization” itself which caused
macroeconomic problems in Turkey
after 1989.
It‘s not only “capital account
liberalization” itself which caused
macroeconomic problems in Turkey
after 1989.
But everything changes,if there is a CC at the door…
But everything changes,if there is a CC at the door…
high inflationhigh inflation
upward pressure on FX rates
upward pressure on FX rates
Kibritçioğlu, November 8, 2004, (60/81)
Years
Cumulative FDI Permits
(million USD)
Annual FDI Permits (million
USD)
Share of Manufacturing
Industry on Authorized FDI
(%)
Number of Foreign Capital
Companies
Total Capital of Foreign Capital
Companies (bill. TL)
Realized FDI Inflows (million
USD)
Realized FDI Outflows (million
USD)
Net FDI Inflows (million
USD)
1980 97 97 91.5 78 283901981 435 338 73.0 109 47400 141 46 951982 602 167 59.0 147 100196 103 48 551983 704 103 86.6 166 147109 87 41 461984 976 271 68.5 235 254775 113 0 1131985 1210 234 60.9 408 464981 99 0 991986 1574 364 53.2 619 707164 125 0 1251987 2229 655 44.9 836 960035 115 0 1151988 3050 821 59.8 1172 1597103 354 0 3541989 4562 1512 62.8 1525 4847832 663 0 6631990 6423 1861 65.2 1856 7943775 684 0 6841991 8390 1967 55.7 2123 13101036 907 97 8101992 10210 1820 70.0 2330 23441214 911 67 8441993 12274 2063 76.0 2554 36737050 746 110 6361994 13751 1478 74.9 2830 62449964 636 28 6081995 16690 2938 68.0 3161 113013790 934 49 8851996 20525 3836 16.7 3582 235971182 914 192 7221997 22204 1678 52.0 4068 458968459 852 47 8051998 23850 1646 61.8 4533 823560554 953 13 9401999 25550 1700 66.1 4950 1446503 813 30 7832000 29027 3477 31.8 5328 3063464 1707 725 9822001 31752 2725 45.7 5841 6184411 3288 22 32662002 33995 2243 39.8 6280 10092737 590 5 585
2003 * 35203 1208 58.8 6511 12605285 414 8 406
FDI inflows into Turkey are far from being sufficient to improve the economy: Only 16.1 billions of USD within 23 years...
Kibritçioğlu, November 8, 2004, (61/81)
In 2003, Turkey’s GDP amounted to 240 billion USD, while its total external debts reached to 147 billion USD.
95 out of 147 billion USD amounting total debts are created solely by the public sector.
Selected Indicators of External Debts of Turkey (percent)
61.9
53.9
17.6
0102030405060708090
1998
Q1
1998
Q2
1998
Q3
1998
Q4
1999
Q1
1999
Q2
1999
Q3
1999
Q4
2000
Q1
2000
Q2
2000
Q3
2000
Q4
2001
Q1
2001
Q2
2001
Q3
2001
Q4
2002
Q1
2002
Q2
2002
Q3
2002
Q4
2003
Q1
2003
Q2
2003
Q3
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
Selected Events Public Sector's Share on Total Debts Total External Debts to GDP Short-Term to Total Debts
Kibritçioğlu, November 8, 2004, (62/81)
The ratio of international reserves to short-term external debts increased significantly after the 2000-2001 financial crisis, but in the AK-Party era it declined again slightly.
Reserves vs. External Debts (percent)
30.729.4 36.8
113.3
250.5
174.1
020406080
100120140160180200220240260280
1998
Q1
1998
Q2
1998
Q3
1998
Q4
1999
Q1
1999
Q2
1999
Q3
1999
Q4
2000
Q1
2000
Q2
2000
Q3
2000
Q4
2001
Q1
2001
Q2
2001
Q3
2001
Q4
2002
Q1
2002
Q2
2002
Q3
2002
Q4
2003
Q1
2003
Q2
2003
Q3
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
Selected Events Net International Reserves to Total External Debts
Central Bank's FX Reserves to Public Sector's External Debts Net International Reserves to Short-Term External Debts
Kibritçioğlu, November 8, 2004, (63/81)
Kibritçioğlu, November 8, 2004, (64/81)
Public Sector:Public Sector:Deficits and DebtsDeficits and Debts
Kibritçioğlu, November 8, 2004, (65/81)
The PSBR is a better indicator of the public sector in Turkey because it also covers the non-CB public institutions.
The PSBR is diminishing since three years, while the non-interest PSBR is improving.
Public Sector Borrowing Requirement (PSBR) and Consolidated Budget Balance (CBB)
-18
-15
-12
-9
-6
-3
0
3
6
9
1219
75
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Non-interest PSBR to GDP PSBR to GDP
Non-interest CB to GDP CB to GDP
Kibritçioğlu, November 8, 2004, (66/81)
Non-interest (primary) consolidated budget balance (CBB) seems to be stabilized with respect to nominal output growth, while the CBB (incl. interest payments) is diminishing since late 2003 again.
Cumulative Consolidated Budget Balance / Average Nominal Industrial Production
-150
-125
-100
-75
-50
-25
0
25
50
7519
98.0
1
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events Primary Balance to Nominal Output CB Balance to Nominal Output
Kibritçioğlu, November 8, 2004, (67/81)
As a result of both the successful disinflationary policies and the Government’s increasing political credibility, Turkish Treasury pays now lower interest rates in domestic borrowing.
Compound, Weighted Auction Interest-Rates (Treasury, percent) & Confidence Index
25.4
193.7
15.1
-20
0
20
40
60
80
100
120
140
160
180
200
1998
.01
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events Nominal Reel (ex ante) Reel (ex post) Real Sector Confidence Index
Kibritçioğlu, November 8, 2004, (68/81)
Public sector’s domestic debts increased sharply following the 2000-2001 crisis, both in nominal and real terms.
Domestic Debt Stock of the Public Sector (billion TL)
0
50000000
100000000
150000000
200000000
25000000019
98.0
1
1998
.05
1998
.09
1999
.01
1999
.05
1999
.09
2000
.01
2000
.05
2000
.09
2001
.01
2001
.05
2001
.09
2002
.01
2002
.05
2002
.09
2003
.01
2003
.05
2003
.09
2004
.01
2004
.05
2004
.09
Selected Events nominal, billion TL real, billion TL
Kibritçioğlu, November 8, 2004, (69/81)
Public sector’s domestic debts in terms of USD are also increasing sharply...
Domestic Debt Stock of the Public Sector (billion USD)
20
40
60
80
100
120
140
160
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Kibritçioğlu, November 8, 2004, (70/81)
Public sector’s domestic debts seem to be stabilized with respect to changes in industrial production index within the last two years.
Ave. Domestic Debt Stock of the Public Sector to Ave. Industrial Output (%)
80100120140160180200220240260
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Kibritçioğlu, November 8, 2004, (71/81)
Since the latest general elections in November 2002, the public sector’s domestic debts increased more than 65 percent in terms of USD, while its external debts expanded only around 15 percent.
Domestic and External Debts of the Public Sector (billion USD)
45.2
84.9
140.4
53.4 79.9
92.2
0
20
40
60
80
100
120
140
160
180
1998
Q1
1998
Q2
1998
Q3
1998
Q4
1999
Q1
1999
Q2
1999
Q3
1999
Q4
2000
Q1
2000
Q2
2000
Q3
2000
Q4
2001
Q1
2001
Q2
2001
Q3
2001
Q4
2002
Q1
2002
Q2
2002
Q3
2002
Q4
2003
Q1
2003
Q2
2003
Q3
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
Selected Events Domestis Debts of the Public Sector External Debts of the Public Sector
Kibritçioğlu, November 8, 2004, (72/81)
Kibritçioğlu, November 8, 2004, (73/81)
Financial SectorFinancial Sector
Kibritçioğlu, November 8, 2004, (74/81)
Feb. '02
Aug. '97
Feb
. '01
Sep. '88
Feb. '87
Nov. '83
Aug. '82
May '80
Jun. '79
Dec. '82
Jan. '86
Nov. '90
No
v. '9
1
Oct. '93
Apr. '94
Oct. '94
Jul. '99
Oct
. '00
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5Ja
n-79
Jan-
80
Jan-
81
Jan-
82
Jan-
83
Jan-
84
Jan-
85
Jan-
86
Jan-
87
Jan-
88
Jan-
89
Jan-
90
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
High Fragility BSF3 BSF2
Banking Sector Fragility in TurkeyBanking Sector Fragility in TurkeyBanking Sector Fragility in TurkeyBanking Sector Fragility in Turkey
Turkish banking sector experienced difficulties many times within the last 25 years, as a result of their own excessive risk-taking behavior in the past.
For Methodology: see Kibritçioğlu (2003), “Monitoring ...”.
Kibritçioğlu, November 8, 2004, (75/81)
The Turkish banking sector is recovering from the 2000-2001 crisis, and according to the BSF index, it is taking excessive risk again...
(The BSF3 index is a weighted average of real annual changes in foreign liabilities,
claims on private sector, and total deposits.)
Banking Sector Fragility Index
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
For Methodology: see Kibritçioğlu (2003), “Monitoring ...”.
Kibritçioğlu, November 8, 2004, (76/81)
The recent developments in the FL to FA ratio indicate that the external open (short) position of Turkish banking system is decreasing now...
Deposit Banks: Foreign Liabilities to Foreign Assets (percent)
708090
100110120130140150160
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Banking Sector Fragility in TurkeyBanking Sector Fragility in TurkeyBanking Sector Fragility in TurkeyBanking Sector Fragility in Turkey
Kibritçioğlu, November 8, 2004, (77/81)
The ratio of 1-month to 12-month deposit interest rates exhibits a different pattern after the 2000-2001 financial crisis: It is very close to 100 percent now...
Weighted Deposit Interest Rates: Ratio of 1-Month to 12-Months Interest Rates (percent)
75
95
115
135
155
175
195
215
235
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Kibritçioğlu, November 8, 2004, (78/81)
1
10
100
1000
10000
10000019
86.0
1
1987
.01
1988
.01
1989
.01
1990
.01
1991
.01
1992
.01
1993
.01
1994
.01
1995
.01
1996
.01
1997
.01
1998
.01
1999
.01
2000
.01
2001
.01
2002
.01
2003
.01
2004
.01
January 1986 = TL 1 January 1986 = USD 1
Istanbul Stock Exchange’s National 100 Istanbul Stock Exchange’s National 100 IndexIndex
Istanbul Stock Exchange’s National 100 Istanbul Stock Exchange’s National 100 IndexIndex
Kibritçioğlu, November 8, 2004, (79/81)
-100
0
100
200
300
400
500
600
700
800
900
1987
.01
1988
.01
1989
.01
1990
.01
1991
.01
1992
.01
1993
.01
1994
.01
1995
.01
1996
.01
1997
.01
1998
.01
1999
.01
2000
.01
2001
.01
2002
.01
2003
.01
2004
.01
January 1986 = TL 1 January 1986 = USD 1
Annual Increases in ISE’s National 100 IndexAnnual Increases in ISE’s National 100 IndexAnnual Increases in ISE’s National 100 IndexAnnual Increases in ISE’s National 100 Index
Kibritçioğlu, November 8, 2004, (80/81)
Kibritçioğlu, November 8, 2004, (81/81)
Inflation and interest rates are still declining gradually.
In the Turkish manufacturing industry, the labor productivity is increasing and real wages remain low, while the industrial production index is rising again.
There is still a deep unemployment problem in Turkey. Production increases are not fully translated into employment increases yet.
Excessive risk taking behavior of the banking system (in terms of the BSF index) is expected to decline towards historical averages.
Real effective exchange rates indicate a slight depreciation of the Turkish lira.
Further structural reforms, stronger privatization efforts and continuity in political stability are needed in the country.
In Turkey, it is expected that a decision of the heads of EU governments next month in favor of the start of the accession talks for full-membership in early 2005 will positively affect the Turkish economy, particularly in terms of the FDI inflows.
Concluding RemarksConcluding RemarksConcluding RemarksConcluding Remarks