TURKEY: RECENT DEVELOPMENTS January April 2019 · 2019. 9. 4. · 2 Economy is recovering after the...
Transcript of TURKEY: RECENT DEVELOPMENTS January April 2019 · 2019. 9. 4. · 2 Economy is recovering after the...
TURKEY: RECENT DEVELOPMENTSJanuary – April 2019
2
Economy is recovering after the currency shock in August 2018
* Source: CBRT ** as of May 2019
CBRT Survey of Expectations (end of 2019)
Forecast (as of May 2019)
CPI 16,7%
GDP 0,3%
Current Account (bn USD) -14,7
USDTRY 6,43
63,5
105,5
85
90
95
100
105
110
115
50
55
60
65
70
75
80
A-16 J-16 O-16 J-17 A-17 J-17 O-17 J-18 A-18 J-18 O-18 J-19 A-19
Consumer Confidence Index Real Sector Confidence Index
46,8
-4,7
-20
-10
0
10
20
30
40
45
50
55
60
A-16 J-16 O-16 J-17 A-17 J-17 O-17 J-18 A-18 J-18 O-18 J-19 A-19
PMI Industrial Production (%, yoy)
3,1
4,3
6,1
1999 - 2004 2005 - 2010 2011 - 2018
Avg. Real GDP Growth (%)
75
175
275
375
475
575
675
2002 2005 2008 2011 2014 2017 2020 2023
Real GDP Growth (Index: 2002=100)
Turkey 5,6%
India 7,7%
Russia 3,3%
S.Africa 2,6%
Brazil 2,3%
Avg. GDP Growth
(2003-’18)
China 9,2%
3
Nominal GDP quadrupled in last 15 years
Source: Turkstat, CBRT, IMF*as of May 2019
238312
405
501551
675
765
644
772832
874950 934
859 863 852
766
2002 2006 2010 2014 2018
Nominal GDP (bn USD)
4Source: Turkstat, Eurostat, UN*as of May 2019
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
0-4
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 0,05 0,03 0,01
20 20 21 21
22
2324
25
2627
2728
29
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Yearly Average Employment (mio)
5Source: Turkstat
High potential with young population and improving workforce
2014-18 avg.827k
2006-13 avg.621k
700k new job is created between 2006-18 in each
year averagely.
9,0 9,210,0
13,1
11,1
9,18,4 9,0
9,9 10,310,9 10,9 11,0
44,5 44,3 44,9 45,7 46,5 47,4 47,6 48,350,5 51,3 52,0 52,8 53,2
20
30
40
50
60
5
10
15
20
25
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Unemployment rate (%)
Labor Participation Rate (%)
2019 Feb.: 14,7%
2,4 2,4 2,5 2,9
5,2
9,5 9,08,5
7,0
5,34,2
5,2 4,9 4,73,8 4,1 4,4 3,9
7,3
4,83,7 4,1 3,7
2,7 2,21,5 0,4
0
3
6
9
12
2010 2011 2012 2013 2014 2015 2016 2017 2018
Peers' Budget Deficit (%GDP)
Brazil S. Africa Poland
3,5
1,3
1,9
1,0 1,1 1,0 1,1
1,5
2,0
2010 2011 2012 2013 2014 2015 2016 2017 2018
Budget Deficit (%GDP)
Maastricht criterion
6Source: Bloomberg, IMF*as of May 2019
Maastricht criterion: 3%
Strong fiscal discipline has been the main pillar of economic policy
* Latest figure: December 2018
Turkey
Eurozone
40,136,5
32,7 31,4 28,8 27,6 28,3 28,3 29,1
84,6 86,6 89,7 91,6 91,8 89,9 89,1 86,8 85,0
2010 2011 2012 2013 2014 2015 2016 2017 2018
General Government Debt Stock (%GDP)
Turkey Eurozone
7Source: Bloomberg, Turkstat, WTO*as of May 2019
Decreasing trade gap with diversified export markets
* Latest figure: February 2019
Composition of Imports (%)
0,8%
0,9%0,9%
0,9%1,0% 1,0% 1,0%
1,0%
2011 2012 2013 2014 2015 2016 2017 2018E
Turkey's Share in World Total Export
46
3942
43 4448 47
50
21
28
23 22 22 22 23
18
2011 2012 2013 2014 2015 2016 2017 2018
Exports (% of total)
EU Near and Middle Eastern
69,2%
18,0%
12,8%
2008
74,3%
15,3%
10,5%
2018
135152 152 158 144 143 157 168 169
241 237 252 242207 199
234 223 210
10583
9984
63 5677
5541
-150
-100
-50
0
50
100
0
50
100
150
200
250
300
350
400
450
2011 2012 2013 2014 2015 2016 2017 2018 2019
Trade Balance (bn USD, 12-month cumulative)
Total Exports Total Imports Foreign Trade Gap
4,2
5,7 5,4 5,1
1,8
5,8
9,0
5,5
6,7
4,7
3,7 3,8
5,6
3,6
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Current Account Deficit (% GDP)
8Source: Bloomberg, CBRT, UNCTAD
Current account deficit is decreasing
* 2019 IMF forecast: -0,7%* * Latest figure: Q4, 2018
-15
-10
-5
0
5
10
15
20
25
30
35
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Portfolio Inflows(12-month cumulative, bn USD)
Equity Security
0
5
10
15
20
25
30
35
2004 2007 2010 2013 2016 2019
Foreign Direct Investment Inflows(12-month cumulative, bn USD)
9Source: Bloomberg, CBRT
Central bank is implementing tight monetary policy
24,00
6
9
12
15
18
21
24
27
30
Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 Aug-18 Dec-18 Apr-19
Interest Rate Corridor Overnight Lending RateOvernight Borrowing Rate 1-week REPO RateLate Liquidity Window Lending Rate CBRT Average Funding Rate - 5 day MA
75
0
20
40
60
80
100
120
140
160
180
200
Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Apr-18 Aug-18 Dec-18 Apr-19
One Week Repo Overnight Lending
Late Liquidity Window Net Open Market Operations
19,5
4
6
8
10
12
14
16
18
20
22
24
26
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
Annual CPI (%)73
27
0
20
40
60
80
100
120
Apr-03 Apr-05 Apr-07 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19
CBRT Gross Reserves (bn USD) CBRT Net Reserves (bn USD)
10
Source: IMF FSI Latest Available Data for Each Country by May 2019.
Well capitalized, strong banking sector attracts foreign interest
23 23 22
2019 19 19 18 18 18 18 18 17
16 16 16 16 16 16 15 15 15 1413 12
0
5
10
15
20
25
Irel
and
Ind
on
esia
Ne
the
rlan
ds
UK
Ge
rman
y
Fran
ce
Bel
giu
m
Po
lan
d
Au
stri
a
Turk
ey
Bra
zil
Cze
ch R
ep.
Jap
an
Hu
nga
ry
Ital
y
Gre
ece
Mex
ico
Arg
enti
na
Spai
n
Can
ada
Po
rtu
gal
USA
Ch
ina
Ind
ia
Ru
ssia
Capital Adequacy Ratio (CAR) (%)
0 1 1 1 2 2 2 2 2 2 2 2 3 3 3 3 3 4 46
9 9 10 11
42
0
5
10
15
20
25
30
35
40
45
Can
ada
USA
Jap
an UK
Ge
rman
y
Ch
ina
Au
stri
a
Ne
the
rlan
ds
Mex
ico
Bel
giu
m
Ind
on
esia
Hu
nga
ry
Fran
ce
Turk
ey
Bra
zil
Arg
enti
na
Cze
ch R
ep.
Spai
n
Po
lan
d
Irel
and
Po
rtu
gal
Ind
ia
Ital
y
Ru
ssia
Gre
ece
Non-performing Loans to Total Gross Loans (NPL)
(%)
46
2622
19 18 18 1715
12 12 11 10 9 9 8 8 7 7 7 6 64 4
0 0
-10
0
10
20
30
40
50
Arg
enti
na
Mex
ico
Can
ada
Hu
nga
ry
Turk
ey
Cze
ch R
ep.
Ind
on
esia
Bra
zil
Ne
the
rlan
ds
Ch
ina
Ru
ssia
Au
stri
a
Bel
giu
m
Po
lan
d
Spai
n
UK
Jap
an
Po
rtu
gal
Fran
ce
Irel
and
Ge
rman
y
Ital
y
USA
Ind
ia
Gre
ece
Return on Equity (ROE) (%)5,1
2,82,5
1,9 1,91,6
1,4 1,2 1,1 0,9 0,9 0,8 0,8 0,7 0,7 0,6 0,6 0,5 0,4 0,4 0,4 0,3 0,3
0,0 0,0-1
0
1
2
3
4
5
6
Arg
enti
na
Mex
ico
Ind
on
esia
Hu
nga
ry
Turk
ey
Bra
zil
Ru
ssia
Can
ada
Cze
ch R
ep.
Irel
and
Ch
ina
Po
lan
d
Au
stri
a
Ne
the
rlan
ds
Po
rtu
gal
Bel
giu
m
Spai
n
UK
Fran
ce
USA
Ge
rman
y
Jap
an
Ital
y
Ind
ia
Gre
ece
Return on Assets (ROA) (%)
11Source: BRSA
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 profits
1,16 1,50 1,62 1,44
11,28
14,28
15,8814,75
0,00
4,00
8,00
12,00
16,00
20,00
Dec-2015 Dec-2016 Dec-2017 Dec-2018
Profitability Ratio (%)
Net Income / Average Total Assets (%)
Net Income / Average Shareholder's Equity (%)
6,4
4,9
9
3,9
0
3,6
2
3,8
2
5,5
7
3,8
0
2,7
8
2,9
5
2,8
3
2,9
4
3,2
0
3,3
5
3,0
5
4,0
4
4,2
3
Non-Performing Loan Ratio (%)
* Latest figure: Mar 2019
19,0
16,617,9
15,316,3
15,6 15,616,9 17,3
16,4
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Capital Adequacy Ratio (%)
* Latest figure: Mar 2019
1.007 1.218
1.371
1.7321.994
2.357
2.731
3.258
3.8674.139
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Banking Sector Total Asset (billion TL)
12Source: Turkstat, WTTC
Tourism revenues and number of visitors doubled between 2004-2014.
Strong recovery in 2018!
* Based on WTTC data
1720
1921
25 25 2528 29
3234
31
22
2630
1721 19
2326 27 29
31 3134
36 36
25
32
39
2004 2006 2008 2010 2012 2014 2016 2018
# of Foreign Visitors vs. Revenues
Revenue (bn. USD) # of tourists (mio)
* Latest figure: Q4 - 2018
4,3
-60
-40
-20
0
20
40
60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Turkey Foreign Arriving Visitors Change (YoY,%)
3,5
4,0
4,5
5,0
2004 2007 2010 2013 2016 2019 2022 2025
Direct Contribution to GDP* (%)
0
50
100
2004 2007 2010 2013 2016 2019 2022 2025
Tourism Revenue*
13Source: Turkstat, Turkish Airlines Investor Presentation
Air traffic more than tripled in last 10 years
• As of 31.12.2018• Note: Diameters of the bubbles are proportional to the number of passengers carried.
4556 62
7079 86
103118
130
149166
181174
193210
0
50
100
150
200
250
mioPassengers Carried (Turkey)
Domestic
International
Total
Wide Body
Range
ISTANBUL
BOS
HKG
NRT
PEK
BKK
JNB
LAX
GRU
EZE
SGN
CPT
CAN
IAD
IAH
JFK
ICN
KIX
KUL
SIN
ORD
CGK
YYZ
YUL
PVG
Narrow Body
Range
SFO
MEX
BOGCCS
MIA
MNLTPE
MPM
DUR
ATL
MRU
HKT
TNR
HAV
PTY
201 out of 257 international destinations
More than 40% of world-wide international traffic
Over 60 national capitals
All of Europe, Middle East, Central Asia and North and East Africa
Narrow Body Range Capability to and from Istanbul(with full passenger payload)
14
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