1. Turkish Economy : An Overview N. Kamuran MALATYALI

2. Presentation Outline • Once Upon a Time : • Land of Crises • Anti-Inflationary Programme • Paving the Road • Structural Shift • 2008 Syndrome • New Global Environment • Wuthering Heights • Turkey : A Hub with Relative Stability?

3. Once Upon A Time – Land of Crises • Turkish Economy Experienced Hard Times During the Previous Century • Between 1924-2001 (78 years) the number of (-) growth years: 14 • (1927, 1932, 1935, 1940, 1941, 1944, 1945, 1949, 1954, 1979, 1980, 1994, 1999, 2001) • Recurring crises every 5.5 years, on the average • Long run average growth rate of the economy: %4.4

4. Once Upon A Time – Land of Crises • 1990s were nightmare with respect to any indicator • Sustainability was the real issue • High Public Sector Borrowing Requirement => High Domestic Borrowing => High and volatile inflation + High Interest Rates + High rates of depreciation • Recurring Deep Crises: 1994, 1999 • Volatility in Growth

5. Borrowing Requirement and Debt Stock

6. Real Rate of Interest

7. Growth and Contraction

8. Once Upon A Time – Anti-Inflationary Programme • To restore stability - Disinflation Programme of 2000 : Failure • 2001 February Crisis • Transition to the Strong Economy Programme : Comprehensive restructuring (privatization, free market regulations), free float, sustainability in public finance, banking system rehabilitation

9. Paving the Road – Structural Shift

10. Real Rates of Interest

11. Increased Welfare

12. Contained Debt Risk

13. Paving the Road – 2008 Syndrome • 2008 Global Crisis Deeply Affected the World • It is still under way • 2001 Crisis of Turkey (collapse of the banking system and its rehabilitation) shielded Turkey in 2008.

14. 2008 Syndrome - Growth of the World Economy

15. 2008 Syndrome - World Trade Volume (% Change)

16. 2008 Syndrome – Turkish Current Account Balance

17. 2008 Syndrome - Paving the Road

18. New Global Environment • Things are pretty different beginning by 2008 • System seeks shelter and a stable ground

19. Debt Stock/GDP (EU Definition)

20. Euro Imports of Goods and Services(% Change)

21. World Trade Volume (% Change)

22. Pre-and Post-Growth Performance of the Global Crisis World AdvancedEconomies EmergingandDevelopingEconomies

24. Turkish economy benefited from the positive global climate.

25. Growth in the World Economy

26. Growth Performance World Advanced Emerging

27. Turkey : A Hub with Relative Stability? • Things have changed • Turkey has increased degree of openness • Stabilized economic structure • Foreign participation

28. AVERAGE GDP GROWTH RATES IN TURKEY OVER PERIODS

29. Development in the Measure of Openness of Turkey

30. Growth Performance ofDeveloping Economies CentralandEasternEurope EmergingAsia Latin America and the Caribbean Middle East and North Europe Sub-SaharanAfrica

31. IMF Growth Projections World AdvancedEconomies EmergingandDevelopingEconomies

32. Growth in Advanced Economies Euro-zone G-7 Economies

33. Growth Comparisons EmergingandDevelopingEconomies Turkey_IMF Turkey_OVP

34. General Government Gross Debt / GDP AdvancedEconomiesEmergingEconomiesTurkey

35. Growth Performance of Developing Economies, and Turkey

36. Private Capital Flows towards Emerging Economies

38. Current Account Deficit in Economies Similar To Turkey EmergingandDevelopingEconomiesCentraland East EuropeTurkey(IMF) Turkey(OVP)

39. Paving the Road – Structural Shift

41. Periodic Growth Rates of the World Economy

42. Current Account Deficit and Fund Flows