MINISTRY OF FOREIGN AFFAIRS

1. TURKISH ECONOMY IN THE WORLD MINISTRY OF FOREIGN AFFAIRS

2. THE GEOGRAPHICAL LOCATION OF TURKEY

3. GEOGRAPHICAL ADVANTAGES OF TURKEY • Area of 785.347 km2. • 8.485 km of coastline, surrounded by sea on three sides:by the Black Seatothe north, the Mediterranean tothe south and the Aegean Seato the west. • A uniquegeographicallocation as a gatewaytoEuropean, MiddleEastern, North AfricanandCentralAsianmarkets. • Infourhours of flightfromIstanbul, one can reach morethan 50 countriesand a quarter of theworldpopulation. • A politicalandeconomicattractioncenterfortheneighbouringgeographies, withitsstrategicallocation.

4. DEMOGRAPHIC ADVANTAGES OF TURKEY • A huge and growing market→73,7 million population (2010) • Young, dynamic and well-trained population. • * 61% of the population is under the age of 34. (Approximately 45 million) • * Average Age: 28,8 • * 500 thousand university graduates every year. • * 24,7 million of thepopulation is activelyemployed. • * The 5th biggestlaborpower, ifrankedamongthe EU membercountries

5. TURKEY IN THE WORLD ECONOMY (GDP based on purchasing power parity , Trillion Dollars, 2009)

6. TURKEY IN THE EUROPEAN ECONOMIES (GDP based on purchasing power parity , Trillion Dollars, 2009)

7. TURKEY AND G-20 • Turkey is a G-20 member, the “Super League” of world economies, established in 1999. • This membership gives Turkey the opportunity to express its views and suggestions for the solution of international economic and financial problems and strengthens its profile. • It is an important platform for sharing views on global economy with the other leading actors. • As a by-product of our pro-active foreign policy, we are not solely focusing on our agenda, but also trying to reflect the views of other actors not represented in G-20.

8. GDP PER CAPITA

9. GDP PER CAPITA (Short Term Targets)

10. DISTRIBUTION OF EMPLOYMENT Distribution of Employment by Economic Sectors (%)

11. FOREIGN TRADEExports Annualestimate as of February 2011 Source: TURKSTAT

12. FOREIGN TRADEMain Export Destinations of Turkey Main Export Markets -2010-Billion $ Germany 11,4 UK 7,2 Italy 6,5 Iraq 6 France 6

13. FOREIGN TRADEShort Term Targets

14. FOREIGN TRADEImports Annual estimate as of February 2011 Source: TURKSTAT

15. FOREIGN TRADEMain Import Countries Main Import Countries -2010- Billion $ Russia 21,6 Germany 17,5 China 17,2 USA 12,3 Italy 10,2

16. BILATERAL TRADE WITH THE NEIGHBOURING COUNTRIES(Global Downturn Period -Billion $) • 2008 2009 2010 • Greece 3,58 2,76 3 • Bulgaria 4 2,5 3,2 • Georgia 1,52 1,05 1 • Azerbaijan 2,6 2,15 2,41 • Iran 10,2 5,43 10,7 • Iraq 15,2 6 7,4 • Syria 1,75 1,75 2,52

17. TURKISH INDUSTRYAutomobile and Household Goods • Turkeyranks 16th in theworldproduction of motor vehicles. • Turkey is theleadingbusmanufacturerand 3rd largestcommercialvehiclemanufacturer in Europe. • Around 75% of theautomativeandautopartsindustryexportsaredeliveredtothe EU countries. • Duringthelast 4 years, ship-buildingcapacity of Turkey has grown 3 times. Turkeyranks 7th in worldshipexports. • Intheproduction of householdgoods, Turkey has a prominantreputation. Itranks 8th in worldexports of refrigerators, 6th in washingmachinesand 14th in dishwashingmachines. • Most of thedomesticappliancesproduction is exportedtothe EU.

18. TURKISH INDUSTRYDefence Industry In the year 2011, 1 billion $ of exports is expected.

19. TURKISH INDUSTRYTextiles and Clothing • Turkey ranks 7th in the world cotton production. There are more than 35 thousand textile and clothing companies in Turkey. • Turkey ranks 4th in knitted clothing, 8th in woven clothing, 3rd in socks and stockings and 8th in leather wear exports. • 80% of the textile products are exported to the EU countries. • Turkey is one of the major producers of organic & ecologic textile products .

20. FOREIGN INVESTMENTS • With its population of more than 73 million, its dynamic and open-market economy, competitive industry and the Customs Union with the EU for more than 15 years, Turkey is an attractivecountry for foreign investors. • With its high performance, Turkey is steadily heading for an annual GDP of 1 trillion dollars. During the last 8 years, the total inflow of foreigndirectinvestmentshas reached to 93,6 billion dollars. • According toIMF and OECDreports/projections, Turkey is among the most rapidly growing economies in 2010 and 2011.

21. FOREIGN INVESTMENTS-II

22. INTERNATIONAL COMPANIES IN TURKEY • As of February 2011, thenumber of internationalcompaniesoperating in Turkeywas 26.609. • Top 3 countriesaccordingtothecountry of origin of internationalcompanies: Germany (4411), UK (2272) andtheNetherlands (1894). • Internationalcompaniesoperating in Turkeyaremostlyfocused on wholesaleandretail, manufacturing, realestate, chemicalindustry, textileandfoodproduction. • Top 4 citieshostinginternationalcompanies in Turkey: • -İstanbul (14810) • -Antalya (3258) • -Ankara (1748) • -İzmir (1560)

23. PRIVATIZATION • Privatization has been among the top priorities on the agenda in line with Turkey’s target of creating a truly competitive market economy. • The involvement and participation of international investors is highly encouraged in the massive privatization program. • The main philosophy of privatization is to confine the role of the state to areas such as health, basic education, social security, national defense and large scale infrastructure investments. • Turkey is listed among the top 25 OECD countries that has gained the most out of its privatization program.

24. PRIVATIZATION-IIPrivatizationImplementations* (Billion USD) (*) 1985-2010 figures include privatizations done by Privatization Administration, Savings Deposit Insurance Fund of Turkey and Ministry of Transportation.

25. GROWTH PERFORMANCE OF TURKEY

26. GROWTH PERFORMANCE OF TURKEY II • Growth Rates of Turkey in the last decade (GDP) • 2000                 6,8%     2001                -5,7%     2002                 6,2%     2003                 5,3%     2004                 9,4%     2005                 8,4%     2006                 6,9%     2007                 4,7%     2008                 0,7%     2009                -4,7% • 2010 8,9%

27. 2011-2017 Dönemi OECD Ülkeleri Yıllık Ortalama Reel GSYİH Büyüme Tahminleri (%) Annual Average Real GDP Growth (%) Forecast in OECD Countries 2011-2017 GROWTH PERFORMANCE OF TURKEY-III (Comparison with OECD Countries) According to OECD, Turkey is expected to be the fastest growing economy among OECD members during 2011-2017, with an annual average growth rate of 6.7 percent.

28. INFLATION RATES (1983-2011)

29. TURKEY’S IMPORTANCE IN THE CONSTRUCTION SECTOR • Turkey is the leading country in its region in the construction sector. • It is the main manufacturer of cement in Europe. Among cement manufacturers in the world, Turkey ranks 4th. Turkey also ranks 10th in steel production. • As of the end of 2010, Turkish construction sector has attained 188 billion dollars worth of contracts in 89 countries, from Balkans to Central Asia, from Russia to the Middle East and Africa. • On an annual basis it has an average business capacity of 20 billion $ (The target for 2011 is 30 billion$, for 2015 50 billion $). • According to the “Top 225 International Contractors" list of Engineering News Record magazine, Turkey is the second country in the world with 33 outstandingfirms (2010).

30. TURKISH BANKING SECTOR-I • Turkey has already completed deep-rooted reforms in the banking sector as of 2006. Thanks to these reforms, the banks in Turkey have not suffered from the global crisis; on the contrary they have increased their profits. • Turkish banks have branches and offices in 11countries (USA, Bahrain, Bulgaria, Georgia, Iraq, UK, TRNC, Luxemburg, Malta, Greece, SaudiArabia).(Source: TheBanksAssociation of Turkey) • There are 41 representations of foreign banks in Turkey (Switzerland 8, Germany 6, the Netherlands 6, USA 4, France 3, UK 4, Spain 2, Italy 2, Qatar, UAE, Belgium, India, Canada, Japan 1).

31. TURKISH BANKING SECTOR-II Source. BDDK (Banking Regulation and Supervision Agency)

32. TOURISM • One of the top 10 tourism destinations across the globe. • Ranked7th in terms of visiting tourists and 8th in terms of tourism revenues in the world.ThemainvisitorsareGerman, RussianandBritishtourists. • Achieved 2,8 % increase in both 2009 and 2010 in thenumber of foreignvisitors, despitetheadverseeffects of the global crisis. • Itpossesses not onlytheinfrastructureforseasidetourism, but alsoforhealth, culture, faith, congress, sports, huntingandarchaeologicaltourism.

33. TOURISM (2010) • In 2010, 28,6 millionforeigntouristsvisitedTurkey. • 2,8% increase as comparedto 2009. • Percentage of tourists in 2010: • German 15.3% • Russian 10.85% • British 9.3% • (Othermostvisitingtourists ; Iranian, Bulgarian, Georgian, Dutch, French, SyrianandItalian).

34. HEALTH TOURISM • Receivingnearly 60 thousandvisitorsforhealthtourism, generating an approximateannualincome of 1 billion $. • Turkey is the 1st in Europeand 7th in theworld in terms of thermalsources. • Modern andverycompetitiveprivatehealthcenters. • Lowcosts in healthservices. • Qualifiedandexperiencedstaff in thehealthsector.

35. TOURISM FIGURES (Past 10 Years) • Touristarrivalsandrevenues (last 10 years) • InternationalRevenuesVisitors(millions) (billion $) • 2001 11.3 7,4 • 2002 13.0 9,0 • 2003 13.7 9,7 • 2004 17.2 12,0 • 2005 20.5 14,0 • 2006 19.3 12,6 • 2007 23.0 14,0 • 2008 26.4 16,8 • 2009 27.3 15,8 • 201028.6 15,6

36. TRANSPORTATION • Turkey has a unique and strategic location as part of both Europe and Asia. • 18.500 km of two-lane highways. The target is to increase it to 22,500 km by the end of 2011. • 12 new motorway projects to be built by the year 2023, the total length of which will be 4,773 kilometers. • Marmaray Project will connect Europe and Asia by railway under the Bosphorus.

37. TURKISH AIRLINES • Fastest growing airline company in Europe. • In terms of destination diversity; 8th airline company in the world, 3rd in Europe. • In terms of profits, 6th biggest airline company in the world. • 131 international; 41 domestic destinations (in total 172). • In 2010 8 new international destinations were inaugurated: (Accra, Bologna, Dar-es Salaam, Entebbe, Nakhcivan, Podgorica, Sochi, Washington D.C.) • In 2011 11 additional international destinations will be established: (Malaga, Thessaloniki, Valencia, Toulouse, Manila, Naples, Turin, Genova) • Sponsorship to world-famous trademarks (F.C.Barcelona, Manchester United, Euroleague)

38. TECHNOLOGY, RESEARCH & DEVELOPMENT • Turkey’s R&D expenditures rose to 0.85% of GDP in 2010. The target is 2%. • The number of “technoparks” reached 39 in 2010. 1.451 firms are active in these parks, the added value of which amounts to 540 million $ in Turkish exports. • Between 2003 and 2009, domestic intellectual property right applications and licensing increased five-fold.

39. TECHNOLOGY, RESEARCH & DEVELOPMENT • Utmostimportanceattachedtoinvestments in informationandcommunicationtechnologies. • A growing market of 30 billion US Dollars, constituting 4 % of GDP • Turkish “software” market recorded a growth rate of % 100 in recentyearsandreachedthelevel of 2 billion US Dollars as of 2009. • Over 68 million mobile phonesubscriptions, 37 millionwideband Internet users. • Welleducatedengineersandspecialisedpersonnel in technologyand IT fields.

40. TECHNOLOGY, RESEARCH & DEVELOPMENT

41. AGRICULTURE • Turkey is the8th biggestpowerin terms of agriculturalproduction (Annualproducevalue of upto 50-60 billion $). • One of themostimportantproducerandexportercountries of theregion. • Producesmorethan 150 agriculturalproducts. The total amount of fruitsandvegetablesproduced is 42 milliontonnes. Exportsto177 countries. • Thanksto her diversegeography & climate; Turkey is: • - ♯1 in terms of hazelnut, fig, quince, cherry, freshanddriedapricotproduction, • - ♯3 in terms of pistachioproduction, • - ♯5 in terms of teaandoliveoilproduction in theworld.

42. TURKEY’S DEVELOPMENT ASSISTANCE Officialdevelopmentassisstance has exceeded 3,4 billion US Dollars in thelast 5 years (79,7 % TİKA, 8,7 % NationalMinistry of Education). The total developmentassistance has reached 7,1 billiondollars (offical+NGOs). YearOfficialAssistanceNGOs’ assistance Total (million $) (million $) (million $) 2005 → 601 450 1,051 2006 → 714 995 1,709 2007 → 602 734 1,336 2008 → 780 796 1,576 2009 → 707 812 1,519 2010 → 997 na --- Source: TİKA

43. TURKEY’S OFFICIAL DEVELOPMENT ASSISTANCE(2010) • Officialdevelopmentassistance (2010)→ 966,82 million $ • Distribution 53,51%→ TheCaucasusandCentralAsia • 24,17% → TheMiddle East • 15,18% → Europe • 4,04% → Africa • 2,48% → Other • Top threecountrieswithbiggestshare (2010): • 134,49 million $ → Pakistan • 107,32 million $ → Afghanistan • 83,81 million $ → Kazakhstan • Source: TİKA

44. NEW ECONOMIC EVOLUTIONS • Mutualelimination of visarequirements (Libya, Lebanon, Syria, Jordan, Albania, Tajikistan, Serbia, Russia, Yemen) • HighLevelStrategicCooperationmechanismswithSyriaandIraq, signing of numerousagreements in variousfields, QuadrupleCooperationMechanismamongTurkey, Syria, Lebanonand Jordan. • DevelopmentAssistanceand TİKA Offices (26 coordinationoffices in 23 countries). • Developingtransportation network withregionalcountries (newrailroadconnections, enlargement of road transport network, advances in maritimecooperation, increasedairlineconnections, THY as the 3rd biggestairlinecompany), • New embassies in Africa

45. CHALLENGES IN THE ECONOMY-I • Trade imbalance : 69,9 billion $ (2008) • 38,8 billion $ (2009) • 71,6 billion $ (2010) • Unemployment : 11% (2008) • 14% (2009) • 11,9% (2010) • Current Account Deficit : 42 billion $ (2008) (5,7%of GDP) • 14 billion $ (2009) (2,3% of GDP • 48,6 billion $ (2010) (6,5% of GDP)

46. CHALLENGES IN THE ECONOMY-II • GrossExternalDebt : 290,4 billion $ in 2010 • PublicSector : 88,9 billion $ • PrivateSector : 189,6 billion $ • Central Bank : 11,8 billion $ • LongTerm : 211,7 billion $ • ShortTerm : 78,6 billion $ • GrossExternalDebt/GDP : 37,8% (2008) • 43,6% (2009) • 39,5% (2010)

47. 2023 TARGETS • Targetsforthecentury-oldRepublic in 2023: • - to be amongthe top ten economies of theworld, • - toreach a tradevolume of 1 trillionDollars, • - tosurpass 500 million US dollars in exports , • - toattain 2 trilliondollars GDP, • - toincrease GDP percapitato 25,000 $, • - tocreate 10 brands of global fame, • - tomeetonethirds of itspowergenerationfromrenewableenergysources, • - toreach a capacitytohost 50 millionforeigntouristsannually.

48. 2023 TARGETS • Further macroeconomic targets for 2023: - to employ 30 million of the population actively, - to decrease unemployment rate to 5 %, - to include every citizen in the social security system, - to decrease infant mortality rates to one-digit numbers, - to complete all regional development projects in order to make Turkey one of the foremost global grain producers, - to double the overall length of railroad network up to 22,000 km with new high-speed railroad lines, - to add 15,000 km double-lane motorways to the road network, - to construct at least three nuclear power plants, - the total energy consumption per capita to exceed 4.000 kWh, - to further advance in aeronautics, satellite and defence technologies.