turkey: recent developments january december...
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TURKEY: RECENT DEVELOPMENTSJanuary – December 2017
3,7
4,9
6,4
1999 - 2004 2005 - 2010 2011 - 2016
Avg. Real GDP Growth (%)
2
Per capita GDP tripled while nominal GDP quadrupled in last 15 years
Source: Turkstat, CBRT
100
125
150
175
200
225
250
275
2002 2005 2008 2011 2014 2017 2020
Real GDP Growth (Index: 2002=100)
Poland 3,8%
Romania 3,5%
Czechia 2,7%
Hungary 1,1%
Avg. GDP Growth
(2003-’16)
Turkey 5,6%
237311
404
500549
675
762
643
769829
872950 934
858 862
2002 2004 2006 2008 2010 2012 2014 2016
Nominal GDP (bn USD)
3 5
81 4 6
98 5
96
1 7 3
04
7 9
06
9 6
56 10
93
1
8 9
80 1
0 5
60
11
20
5
11
58
8
12
48
0
12
11
2
11
01
9
10
88
3
2002 2004 2006 2008 2010 2012 2014 2016(r)
Per capita GDP (usd)
3
Turkish economy recovered rapidly by V-shape growth
Source: Turkstat, CBRT, Bloomberg
* Monthly data is averaged for each quarter. Latest figure: December 17
49,6
55,7
45
48
51
54
57
Jan
15
May
15
Se
p 1
5
Jan
16
May
16
Se
p 1
6
Jan
17
May
17
Se
p 1
7
Jan
18
PMI Manufacturing Index
84,7
135,6
70
80
90
100
110
120
130
140
20
05
- 1
Q
3Q
20
06
- 1
Q
3Q
20
07
- 1
Q
3Q
20
08
- 1
Q
3Q
20
09
- 1
Q
3Q
20
10
- 1
Q
3Q
20
11
- 1
Q
3Q
20
12
- 1
Q
3Q
20
13
- 1
Q
3Q
20
14
- 1
Q
3Q
20
15
- 1
Q
3Q
20
16
- 1
Q
3Q
20
17
- 1
Q
3Q
Industrial Production Index (seasonally adjusted)*
67,7
72,3
55
60
65
70
75
80
Jan
15
May
15
Se
p 1
5
Jan
16
May
16
Se
p 1
6
Jan
17
May
17
Se
p 1
7
Jan
18
Consumer Confidence Index
101,7
110,8
95
100
105
110
115
Jan
15
May
15
Se
p 1
5
Jan
16
May
16
Se
p 1
6
Jan
17
May
17
Se
p 1
7
Jan
18
Real Sector Confidence Index
4Source: Turkstat, Eurostat, UN, 2016
Favourable Demographics: Half of population under age 30
45
50
55
60
65
70
75
2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Total Dependency Ratio(%, Age: 0-14 & >64 / Age: 15-64)
Turkey
Europe
85
90
95
100
105
110
115
120
2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Working Age Population(15-64) (Index: 2014=100)
Turkey
Europe
-0,05 -0,03 -0,01 0,01 0,03 0,05
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
TURKEY
Females Males
0,05 0,03 0,01
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90-94
100+
-0,05 -0,03 -0,01 0,01 0,03 0,05
EUROPE
Males Females
0,05 0,03 0,01
20 20 21 21
22
2324
25
2627
27
29
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 - Nov
Employment (mio)
5Source: Turkstat
High potential with young population and improving workforce
Jan-Nov 20171.310k
2006-16 avg.688k
New job creation in 2017 is nearly 2x of previous
10 year average.
9,0 9,210,0
13,111,1
9,18,4
9,09,9 10,3 10,9
10,3
44,5 44,3 44,9 45,7 46,5 47,4 47,6 48,350,5 51,3 52,0 52,8
20
30
40
50
60
5
10
15
20
25
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -Nov
Unemployment rate (%)
Labor Participation Rate (%)
2,4 2,4 2,5 2,9
5,2
9,5 9,0
5,34,2
5,2 4,9 4,73,8 4,1
7,3
4,83,7 4,1
3,52,6 2,4
0
3
6
9
2010 2011 2012 2013 2014 2015 2016
Peers' Budget Deficit (%GDP)
Brazil S. Africa Poland
3,5
1,3
1,9
1,0 1,11,0
1,1
1,7
2010 2011 2012 2013 2014 2015 2016 2017
Budget Deficit (%GDP)
Maastricht criterion 40,1
36,532,7 31,3 28,7 27,5 28,1 27,9
83,8 86,189,5 91,4 91,9 90,0 89,0 87,4
2010 2011 2012 2013 2014 2015 2016 2017
General Government Debt Stock (%GDP)
Turkey Eurozone
6Source: Bloomberg, IMF Data Mapper
Maastricht criterion: 3%
Strong fiscal discipline has been the main pillar of economic policy
* Latest figure: September 2017
Turkey
Eurozone
7Source: Bloomberg, Turkstat
Decreasing trade gap with diversified export markets
135152 152 158 144 143 157
241 237 252 242207 199
234
10583
9984
63 5677
-150
-100
-50
0
50
100
0
50
100
150
200
250
300
350
400
450
2011 2012 2013 2014 2015 2016 2017
Trade Balance (bn USD)
Total Exports Total Imports Foreign Trade Gap
* Latest figure: December 2017
73,1%
15,9%
11,0%
2007
Composition of Imports (%)
73,6%
14,2%
12,2%
2017
46
3942
43 4448 47
21
28
23 22 22 22 23
2011 2012 2013 2014 2015 2016 2017
Exports (% of total)
EU Near and Middle Eastern
0,8%
0,8%
0,8%
0,9%
0,9%
1,0%
2011 2012 2013 2014 2015 2016
Turkey’s Share in World Total Export
3,54,2
5,7 5,4 5,1
1,8
5,8
9,0
5,5
6,7
4,7
3,7 3,8
4,7
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Current Account Deficit (% GDP)
8Source: Bloomberg, CBRT
Current account deficit is steadily decreasing
* Latest figure: Q3, 2017
0
5
10
15
20
25
30
35
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Foreign Direct Investment Inflows(12-month cumulative, bn USD)
0,4%
0,7%
0,0%
0,2%
0,4%
0,6%
0,8%
1,0%
1,2%
1,4%
1,6%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Turkey's Share in Global FDI Inflows
-15
-5
5
15
25
35
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Portfolio Inflows(12-month cumulative, bn USD)
Equity Security
6
8
10
12
14
Jan-16 Jul-16 Jan-17 Jul-17 Jan-18
CBRT Interest Rate Corridor (%)
Overnight Lending Rate Overnight Borrowing Rate1-week REPO Rate CBRT Average Funding Rate - 5 day MALate Liquidity Window Lending Rate
9Source: Bloomberg, CBRT
Central bank is implementing tight monetary policy
The rise in inflation is expected to be temporary
12,75%
0
20
40
60
80
100
120
140
160
Jun-16 Dec-16 Jun-17 Dec-17
CBRT Funding Composition (billion TRY)
One Week Repo Late Liquidity WindowOvernight Lending Net Open Market Operations
10,4
4
6
8
10
12
14
16
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Annual CPI (%)
3,2
3,4
3,6
3,8
4,0
4,2
4,4
4,6
4,8
May-17 Jul-17 Sep-17 Nov-17 Jan-18
USD/TRY EUR/TRY Basket (0.5 EUR & 0.5USD)
10Source: IMF FSI Latest Available Data for Each Country
Well capitalized, strong banking sector attracts foreign interest
47
16 1612 10 10
5 5 4 4 4 3 3 3 3 2 2 2 2 2 2 1 1 1 0
-5
5
15
25
35
45
55
Gre
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Ital
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Po
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Irel
and
Ru
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Ind
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Spai
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Hu
nga
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Po
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Cze
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ep.
Bra
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Fran
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Bel
giu
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Turk
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Ind
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Au
stri
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Ne
the
rlan
ds
Mex
ico
Arg
enti
na
Ch
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Ge
rman
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Jap
an
USA U
K
Can
ada
Non-performing Loans to Total Gross Loans (NPL) (%)27
23 23
20 19 19 18 18 18 18 17 17 17 17 16 16 16 15 15 15 15 1413 13
12
0
5
10
15
20
25
30
Irel
and
Ne
the
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Ind
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Ge
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Fran
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Bel
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Bra
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Cze
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Gre
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Turk
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Hu
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Arg
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Jap
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Mex
ico
Ital
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Can
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Spai
n
USA
Po
rtu
gal
Ch
ina
Ind
ia
Ru
ssia
Capital Adequacy Ratio (CAR) (%)
4,5
2,42,2 2,1 2,0
1,3 1,2 1,1 1,1 1,0 1,00,8 0,8 0,7 0,6 0,6 0,4 0,4 0,4 0,3 0,3 0,3 0,3 0,2
0,0-1
1
2
3
4
5
6
Arg
enti
na
Ind
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Turk
ey
Hu
nga
ry
Mex
ico
Bra
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Ru
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Cze
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ep.
Can
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Ch
ina
Irel
and
Ne
the
rlan
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Po
lan
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Bel
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Spai
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Au
stri
a
Fran
ce
USA
Ge
rman
y
Ital
y
Po
rtu
gal
Ind
ia UK
Jap
an
Gre
ece
Return on Assets (ROA) (%)
39
22 21 20 2018 16 14 14 12
10 10 8 8 8 8 7 7 5 5 5 4 4 3
0
-10
0
10
20
30
40
50
Arg
enti
na
Can
ada
Hu
nga
ry
Turk
ey
Mex
ico
Cze
ch R
ep.
Ind
on
esia
Ch
ina
Ne
the
rlan
ds
Bra
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Bel
giu
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Ru
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Po
lan
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Spai
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Au
stri
a
Irel
and
Fran
ce
Ge
rman
y
Jap
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Ital
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Ind
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Po
rtu
gal
USA
Gre
ece
Return on Equity (ROE) (%)
11Source: BRSA
19,0
16,617,9
15,316,3
15,6 15,616,9
2010 2011 2012 2013 2014 2015 2016 2017
Capital Adequacy Ratio (%)
* Latest figure: December 2017
Legal limit of %8
Target Rate of %12
The banking sector grew as a result of its strong asset quality and was able
to maintain high profits6
,4
5,0
3,9
3,6
3,8
5,6
3,8
2,8
2,9
2,8
2,9
3,2
3,4
3,1
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Non-Performing Loan Ratio (%)
* Latest figure: December 2017
1.007
1.218 1.371
1.732
1.994
2.357
2.731
3.258
900
1.400
1.900
2.400
2.900
3.400
2010 2011 2012 2013 2014 2015 2016 2017
Banking Sector Total Asset (billion TL)
1,16 1,5 1,63
11,28
14,28
16,04
0
4
8
12
16
20
Dec-2015 Dec-2016 Dec-2017
Profitability Ratio (%)
Net Income / Average Total Assets (%)
Net Income / Average Shareholder's Equity (%)
12Source: Turkstat, WTTC
1720
1921
25 25 2528 29
3234
31
22
2620
24 2327
31 32 3336 36
3941 42
31
39
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
# of Visitors vs. Revenues
Revenue (bn. USD) # of tourists (mio)
0
25
50
75
100
2004 2007 2010 2013 2016 2019 2022 2025
Tourism Revenue*
* USD in bn, based on WTTC data
3,5
4,0
4,5
5,0
2004 2007 2010 2013 2016 2019 2022 2025
Direct Contribution to GDP* (%)
* Based on WTTC data
Tourism revenues and number of visitors doubled between 2004-2014.
Strong recovery has expected to continue in 2018!
38,5
-60
-40
-20
0
20
40
60
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Turkey Foreign Arriving Visitors (YoY,%)
13Source: Turkstat, Turkish Airlines Investor Presentation
Air traffic more than tripled in last 10 years
Turkish Airlines connects you to 301 destinations in 121 countries
1,5 billion people and $24T GDP at 4 hour flight-distance
4556 62
7079 86
103118
130
149166
181174
193
0
50
100
150
200
250
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
mioPassengers Carried (Turkey)
Domestic
International
Total
14
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