1 / 39

Hüseyin Zafer Executive Director May 2011

CENTRAL BANK OF THE REPUBLIC OF TURKEY. Hüseyin Zafer Executive Director May 2011. 1. Contents. General Outlook in the Turkish Economy Post-Crisis Challenges New Policy Mix as the Response Outcomes of the New Policy. 2. I. General Outlook in the Turkish Economy. 3.

magda
Télécharger la présentation

Hüseyin Zafer Executive Director May 2011

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CENTRAL BANK OF THE REPUBLIC OF TURKEY Hüseyin Zafer Executive Director May 2011 1

  2. Contents • General Outlook in the Turkish Economy • Post-Crisis Challenges • New Policy Mix as the Response • Outcomes of the New Policy 2

  3. I. General Outlook in the Turkish Economy 3

  4. Strong Rebound in Economic Activity in 2010 GDP Growth (%) Source: TURKSTAT, SPO 4

  5. Unemployment is Still High but Recovering Non-Agricultural Employment and GDP Growth Unemployment ratio (%, Seasonally Adjusted) Source: TURKSTAT Last observations: January 2011

  6. Disinflation Continues Inflation Realizations (%, red dots are the year-end inflation targets) Source: TURKSTAT

  7. And so Does the Historically-Low Lending Rates.. Lending Rates (%, weighted averages for the categories) Source: CBRT

  8. Highest Decline in CDS Spreads Despite Highest Interest Rate Cut CDS Premia of Selected Countries (January 1, 2008 - April 22, 2011) CDS Premia of Selected Countries (January 1, 2008=0, April 22, 2011) Source: CBRT

  9. II. Post-Crisis Challenges 9

  10. Background Advanced Economies Low Growth rates & Very Low Interest Rates CapitalInflows to Emerging Markets Credit Growth & Risk of Overheating + Emerging Markets Strong Growth Prospects & High Interest Rates Risk of future instability! 10 10

  11. Capital Inflows Capital Inflows (USD billion) * After controlling for the effect of change in Decree No. 32 Source: TURKSTAT, CBT

  12. … Supporting the Strong Growth in Credits Loan Growth (%, year-on-year change) Source: BRSA Last observation: February 2011

  13. … which is Higher than the EU Countries Change in Bank Credit (%, year-on-year, 2010) Source: ECB Statistical Data Warehouse

  14. Outstanding Outlook in the Banking Sector Capital Adequacy Ratio (%) Return on Assets (%) Source: IMFLatest Data Available varies btw 2009-2010

  15. …with Comparatively Very Low NPL Ratios NPL Ratios in Turkey (%) NPL Ratios of Selected Countries (%) Source: IMF, BRSALatest Data Available varies btw 2009-2010

  16. Strong Balance Sheet of Households Household Liabilities to GDP Ratios (%) Household FX Positions *(USD million) Source: Eurostat, CBRT Last observations:Sep. 2010 16 16

  17. …and Non-Financial Sector Non Financial Companies (NFC) FX Positions Bank Loans to Non Financial Companies (% of GDP) • (USD million). • ** Note that the short FX position for short term liabilities are less than 1% of GDP (USD 458 mio). Banking Sector FX position is balanced. Source: Eurostat, CBRT Last observations:Sep.2010 17 17

  18. Maastricht Criterium Maastricht Criterium … and of Public Sector Budget Deficit Forecast for 2011 (% of GDP) Public Debt Forecast for 2011 (% of GDP) *: Turkey’s budget deficit figure is MTP (2011-2013 projection) for central govenment. IMF WEO April 2011 budget deficit forecast for Turkey is 1.7% and better than what was envisaged in Turkey’s MTP as 2.1% for general government. *: Turkey’s debt figure is MTP (2011-2013) projection. IMF WEO April 2011 public debt forecast for Turkey is 39.4%. 18 18 Source: MoF, Treasury, MTP (2011-2013) Targets, IMF WEO April 2011

  19. Stronger Import Demand Partly Fuelled by Credit Growth... The quantity indices depict the stronger import demand growth compared to export growth. Higher growth in import demand resulted in increasing foreign trade deficit. Export, Import & Foreign Trade Balance (12-month MA, USD Billion) Export and Import Quantity Indices (3-month MA) 19 Source: TURKSTAT

  20. ... Leading to a Deterioration in the Current Account… Current Account Balance/GDP (%) * As of February 2011, last 12 months. 20 Source: TURKSTAT, CBRT

  21. …Although “Current Account Imbalances” is a Global Issue. Current Account Balance in Some Countries (2010 IMF Forecasts, ratio to GDP, percent) 21 21 Source. IMF, CBRT

  22. III. New Policy Mix as the Response 22

  23. The Three Phases of the Monetary Policy since the Collapse of Lehman Brothers • Phase-1: Full liquidity support (after the collapse of Lehman Brothers, September 2008) • Phase-2: Exit Strategy (April 2010) • Phase-3:New Policy Mix (since November 2010) - A lower policy rate, - Wider interest rate corridor and - Higher reserve requirements 23 23

  24. RRR and the Policy Rate being the Main Monetary Tools Tools in the order of priority • For Financial Stability: • Required Reserve Ratios • TRY Liquidity Management • Short-Term Interest Rates • For Price Stability: • Short-Term Interest Rates • TRY Liquidity Management • Required Reserve Ratios 24 24

  25. The New Policy Framework of Two Targets and Two Instruments 25 25

  26. Lower Policy Rate and Wider Corridor Policy Rate and Interest Rate Corridor (%)

  27. Higher Reserve Requirements Reserve Requirements Balances (%) Source: CBRT

  28. Reserve Requirements – An International Comparison Current Reserve Requirement Ratios (%) Source: Central Banks, CBRT

  29. Measures Taken by other Turkish Authorities. • Fiscal discipline • No FX loans to households • Domestic currency bond market • Loan/value restrictions • Tax hikes on certain consumer loans • Restrictions on credit card borrowing 29 29

  30. IV. Outcomes of the New Policy 30

  31. 1. Tightening Liquidity Reserve Requirements Balances (billion TRY) Source: CBRT

  32. 2. Desired Level of Volatility in Money Markets Overnight Interest Rates (%) Swap Rates (%) Source: CBRT

  33. 3. Impact on Currency TRY and Other EM Currencies Against USD ( 4 Jan 2010= 1)

  34. 4. Steeper Yield Curve and Inflation Expectations under Control Inflation Expectations (%.) Yield Curve* (%) *Calculated from the compunded returns on bonds quoted in ISE by using ENS method. 34 34 Source: CBRT

  35. CENTRAL BANK OF THE REPUBLIC OF TURKEY Hüseyin Zafer Executive Director May 2011 35

  36. Reserve Slides Monetary Policy Outlook 36

  37. Baseline Scenario – Inflation Report (April 28, 2011) • The net impact is on the tightening side. • 20-25% annual credit growth is targeted at the end of 2011 • Risks both on the downside and on the upside 37 37

  38. Inflation and Output Gap Forecasts Output Gap Forecast (%) Inflation Forecasts (%) 38 38 Source: CBRT, April 2011 Inflation Report

  39. Risk Scenarios • Scenario 1 • In case global economic problems intensify and contribute to stronger capital flows, a policy mix of low policy rate, high RRR and wider interest rate corridor may be implemented for a long period. If this scenario leads to weaker domestic demand, it may require an easing in all instruments. • Scenario 2 • If the global economy faces a faster-than-expected recovery, global inflation may increase and thus trigger a tightening in the monetary policies of developed economies. • Materialization of such a scenario would mean higher global interest rates and demand-driven domestic inflation, and thus necessitate a tightening by using both policy rates and reserve requirements. • Scenario 3 • The increases in commodity prices, if they persist, exert risks regarding general pricing behavior, given the strong pace of domestic demand. • Should such a risk materialize and hamper the attainment of the medium-term inflation targets, there may be stronger tightening than envisaged in the baseline scenario. • Higher commodity prices may worsen the current account balance. • Therefore, the policy mix may vary depending on the developments regarding external demand, capital flows, and the outlook for credit growth. 39 39

More Related