M9 O IMPORTANT EVENTS OF 2013 The past year’s economic indicators show that over the sustainability and stability of the current system. 2013 realizations in growth were better than anti- However, massive corruption and bribery investigations in cipated but foreign trade and current transactions December forced Prime Minister Erdoğan to reshuffle his balance worse than expected… Cabinet. In this latest challenge, the markets were seve- rely affected. The lira lost more than 5 % of its value aga- The Turkish economy continued to move ahead of many inst the dollar in a week, reaching a record low of TL 2.17. other countries in 2013, especially in terms of its gross The stock market plummeted, with an immense outflow of domestic product (GDP) growth, foreign trade and stocks risk-sensitive foreign capital. performance for the most part of the year, yet the thre- ats, such as excessive sensitivity to external shocks, İn September, Bernanke stated that the program would the current account deficit (CAD) and growth that fails continue until all indicators pointed to a US recovery from to lower unemployment, also continued to hang over the the ongoing economic crisis, which many commentators economy’s head like the sword of Damocles. But the main believed would not occur before March 2014. This partial risk to the economy this year was political ambiguity. relief restored confidence to large foreign investors in Tur- key and other emerging economies, which promise better Overall the economy performed well, continuing its high returns despite their higher risk premiums. quarterly growth rates. The country’s GDP registered a growth rate of 3 % , 4.5 % and 4.4 % in the first three quarters respectively. The economic growth in the same 9-month period of the previous year was 4 % . The unemp- loyment rate, however, climbed to 9.9 % as of Septem- ber, a rise of 0.8 % above the same month of the previous year. In terms of inflation, the central bank’s policies were successful in maintaining a steady rate. The consumer price index (CPI) was 6.16 % in December 2012, and ­ ­ this edged up to 7.8 % in November 2013. The CAD was $39.55 billion in the Jan.-Oct. period of 2012, and it rose to $51.9 billion in the same period this year. 0 The year starts with encouraging scoring 0 The Turkish economy started the year 2013 with encou- raging statements from international credit rating agen- cies. S&P raised Turkey’s rating from BB to BB+, one notch below the level of investable country status. Fitch had already upgraded Turkey to investible status in the 0 last quarter of 2012, which was followed by Moody’s, the Canadian Dominion Bond Rating Services (DBRS) and ­ JCR in May. This was very welcome news for Turkey, ra- ising hopes that the economic plane was now ready for Stock Exchange displayes a negative trend take off. The government announced the launch of ambi- The Turkish stock market was one of the world’s worst tious projects such as the construction of a third İstanbul performers in 2013, while the TL dropped to unpreceden- airport, a third bridge over the Bosporus and a nuclear ted lows in the past 12 months due to growing tension on power plant in Sinop. Million dollarsthe markets prompted2010 by the U.S. Fed’s2011 announcement 2012 2012* 2013* But reality did not match the expectations. A massive I-CURRENT TRANSACT.ACCOUNTto scale back its asset-purchasing-45.447 program-75.092 and political -48.507 -39.553 -51.901 wave of demonstrations erupted in late May. This cau- A. FOREIGN TRADE BALANCEdevelopments -56.413 -89.139 -65.335 -54.684 -66.236 sed a loss of market confidence B.while SERVICES raising concerns BALANCE 16.658 20.130 22.602 20.451 21.636 C. REVENUE BALANCE -7.215 -7.841 -7.157 -6.340 -8.159 D. CURRENT TRANSFERS 1.523 1.758 1.383 1.020 858 II-CAPITAL ACCOUNTM10 O -51 -25 -44 -44 -76 III-F0NANING ACCOUNTS 44093 65.684 47.316 35.851 48.140 Direct investments 7.572 13.698 8.944 7.820 7.211 Abroad -1.464 -2.349 4.074 -3.352 -2.015 0n the country 9.036 16.047 13.018 11.172 9.226 Capital 6.203 14.064 9.928 8.441 6.893 0nflow 6.238 16.055 10.561 8.791 7.409 Outflow -35 -1.991 -633 -350 -516 Other capital (Net) 339 -30 454 447 88 Real estate (Net) 2.494 2.013 2.636 2.284 2.245 Portfolio investments 16.093 21.986 40.789 30.276 22.770 Other investments 33.237 28.187 18.397 18.747 29.691 Reserve Assets -12.809 1.813 -20.814 -20.992 -11.532 IV-NET ERROR DEFAULT 1.405 9.433 1.235 3.746 3.837 Despite climbing up to an all-time high-level of 93,000 in put on sale by TMSF, for 402 mln TL on June 1. Former May, BIST main index, have gone through a bumpy se- Çukurova assets, Akşam daily, SKY 360 TV channel and cond half, mainly continuing downwards. Alem Radio, also seized by the TMSF, was sold to Ethem Sancak. Çalık group sold its Sabah-ATV to Zirve Holding Some further milestones: in December, which is owned by the Kalyon Group. The Turkey opened the world’s first underwater rail link bet- government introduced a private pension scheme, in ween two continents, Marmaray, on Oct. 29, connecting which the government will pay 25 percent of the pension Asia and Europe with the $2.8 billion tunnel that was ina- to participants every month as a state contribution. The ugurated A Turkish consortium on May 3 won a $29 bil- Competition Board fined 12 Turkish banks on March 8 lion tender to build and operate a 3rd airport in Istanbul, after finding evidence of collusion in determining loan ra- marking a milestone in the country’s ambition to become tes. Turkey paid its last loan installment of $412 million a global transit hub. A $5.7 billion highway and bridge pri- to the İMF in May after a 52-year relationship. Turkey’s vatization tender was cancelled on Feb. 22. Currently, the NATO allies voiced concern when it said in September government is working on plans to privatize toll roads and it had chosen China’s FD-2000 missile defense system bridges through public offerings, which are expected to be over rival offers from Franco/Italian Eurosam SAMP/T completed in the first quarter of 2014 Turkey and Japan and U.S.-listed Raytheon Co. In November, exports re- signed an official agreement on Oct. 29 to build Turkey’s ached the highest-ever monthly figure at $13.78 billion, second nuclear plant in Sinop. Turkey and the KRG sig- rising 8.8 % above the same month of the previous year. The Asset Peace program attracted TL 10.5 billion, from ned an energy package in late November that will help transform the semi-autonomous­ ­ region into an oil and gas which the state took TL 209 million in tax revenue. To- powerhouse. TPAO and Royal Dutch Shell signed an ag- tal gold imports reached the highest figure in history with reement on oil exploration in the western Black Sea regi- 270,669 kilograms in the first 11 months of the year. The 0 on, envisaging drilling at least one well within two years. Central Bank’s reserves hit a historic high on Dec. 13 with Food company Torunlar 0Gıda’s subsidiary, Torunlar $135.96 billion. Energy, won the tender for Turkey’s second largest na- tural gas grid, Başkent Doğalgaz, with a $1.16 mln offer 2014 budget deficit targetted to be 33.2 billion TL on Jan. 26. The privatization of the power distribution İn the first 9-month period the target of 7.1% envisaged in market was completed after the final four tenders held the current transactions deficit reaching 8 % of GDP has 0 for Ayedaş, Toroslor, Dicle and Vangölü power grids on not been changed in OVP whereas for 2014 a current March 15. ­ transactions deficit of 6.4% of GDP has been forecast. Azerbaijan’s SOCAR has agreed to acquire Star Media The Budget deficit has been determined as 33.2 billion Group, which comprises of daily Star and broadcaster Ka- dollars for t his year. nal 24, in May. Ciner Group has agreed to buy Show TV, Million dollars 2010 2011 2012 2012* 2013* I-CURRENT TRANSACT.ACCOUNT -45.447 -75.092 -48.507 -39.553 -51.901 A. FOREIGN TRADE BALANCE -56.413 -89.139 -65.335 -54.684 -66.236 B. SERVICES BALANCE 16.658 20.130 22.602 20.451 21.636 C. REVENUE BALANCE -7.215 -7.841 -7.157 -6.340 -8.159 D. CURRENT TRANSFERS 1.523 1.758 1.383 1.020 858 II-CAPITAL ACCOUNT -51 -25 -44 -44 -76 III-F0NANING ACCOUNTS 44093 65.684 47.316 35.851 48.140 Direct investments 7.572 13.698 8.944 7.820 7.211 Abroad -1.464 -2.349 4.074 -3.352 -2.015 0n the country 9.036 16.047 13.018 11.172 9.226 Capital 6.203 14.064 9.928 8.441 6.893 0nflow 6.238 16.055 10.561 8.791 7.409 Outflow -35 -1.991 -633 -350 -516 Other capital (Net) 339 -30 454 447 88 Real estate (Net) 2.494 2.013 2.636 2.284 2.245 Portfolio investments 16.093 21.986 40.789 30.276 22.770 Other investments 33.237 28.187 18.397 18.747 29.691 Reserve Assets -12.809 1.813 -20.814 -20.992 -11.532 IV-NET ERROR DEFAULT 1.405 9.433 1.235 3.746 3.837 M11 O CAPACITY UTILIZATION RATE 76 % IN 2013 Capacity utilization rate in manufacturing industry rose 0.4 point in December 2013 over the same month of the previous year… The Turkish Central Bank announced the December’ 13 The highest capacity in computer manufacturing industry capacity utility rates.