ECONOMIC ANALYSIS : TURKEY
INTRODUCTION : TURKEY
Turkey is a transcontinental Eurasian nation, spread over 7.8 million sq km. In terms of economy Turkey is 15th largest GDP-PPP country. Turkey is a democratic republic, whereby the Prime Minister the head of government, and the President is the head of state who holds a largely ceremonial role. Accession to the EU has brought much deserved attention from international investors. Turkey is a member of the Council of Europe, NATO, OECD, OSCE and the G-20 major economies. It enjoyed 11 years of stable political and economical environment.
EMPLOYMENT BY ECONOMIC ACTIVITY (%)
EMPLOYMENT (SEASONALLY ADJUSTED, MILLION PEOPLE)
•The unemployment rate was 9.20 in Feb 2013. The all time high was 14.90 in Aprl 2009.
12 70 10 9.4 8.4 8 6.9 6.2 6 5.3 4.7 4 2.2 2 3.3 4.6 40 50 9.2 8.8 60
0 2002 -2 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
• Turkish economy has expanded at the rate of 25% CAGR over last 10 years • It is estimated to 4.6 from the current 2.2 @ 6.7% CAGR • Total GDP is expected to rise to approx. 1000 bn in 2015, from 794 bn in 2012. • GDP growth in Q1 2013 was 3%
10 -4 -4.8
Annual GDP growth Cumilative GDP growth
Source: TURKSTAT, IMF, World Bank, UN
GDP ANALYSIS – COMPARISON
SECTOR-WISE GDP BREAK UP
• Turkish Economy is mainly supported by the service industry contributing 63% to the GDP. • The manufacturing sector mainly includes Consumer electronics, Textiles, Automobiles, Locomotives, ShipBuilding, Arms, Construction and Iron and Steel. • While the services sector includes Transport, Communication, Tourism and Financial • Financial sector in Turkey is one of the most upcoming sector for the economy
INFLATION IN TURKEY
• Turkey had one of the highest inflation rates in the world pre 1998. • However, The Turkish govt. in 1998 adopted disinflation program where it planned to reduce its fiscal deficit by reducing public sector wages. • The program in 1998 was supported by world bank to help the economy stabilize. • The major change was bought with restructuring of the entire banking industry, thus helping its inflation rate to come down drastically. • According to IMF the Inflation rate will reach 4.5% till the end of 2016.
TURKEY – CURRENT ACCOUNT DEFICIT AND GOVT. DEBT/GDP
FISCAL AND BUDGETARY DEFICIT IN TURKEY
• Turkey had a marginal GDP growth of 4% between 1981 and 2003. It was mainly because of lack of additional fiscal reforms, public sector deficits . • Since the economic crisis of 2001 and the reforms initiated by the finance minister Kemal Derviş, inflation has fallen to single-digit numbers, thus improving the Fiscal and Budgetary situation in Turkey. • The public debt to GDP ratio peaked at 75.9% during the recession of 2001, falling to an estimated 26.9% by 2013.
Turkey’s IMF debt was $4 billion and the total external debt was $119 billion in 2000
The external debt reached $340 billion(43% of GDP) by the end of April 2013. The private sector owed $226 billion last year, which is two-thirds of the total foreign debt. During the 2003-2012 AKP term, $210 billion of new foreign loans have been taken; foreign debt has increased by 162 percent. One-third of the foreign debt, that is $110 billion, belongs to the state and the Central Bank. Turkey’s public debt burden is better than the EU in general. But, the problem lies in private sector loans.
EXTERNAL DEBT IMPROVEMENT AND GOVERNMENT SPENDINGS
Change in External Debt
COMPARISON BETWEEN EU & TURKEY
Causes Rise In Imports
Government Budget Deficit
Slow Exports Growth
CURRENT CREDIT RATING SCENARIO
16 May 2013 -- Moody's has upgraded Turkey's by one notch...
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