an overview of macroeconomic developments in turkey
DESCRIPTION
An Overview of Macroeconomic Developments in Turkey with special reference to the AK-Party Era (2002-04) Aykut Kibritçioğlu Associate Professor of Economics Ankara University, Turkey Tel.: (+90-312) 319 77 20, ext. 340 Fax: (+90-312) 319 77 36 E-Mail: kibritci@p olitics .ankara.edu.tr - PowerPoint PPT PresentationTRANSCRIPT
Kibritçioğlu, November 1-15, 2004, (1/79)
An Overview of An Overview of Macroeconomic Macroeconomic Developments in TurkeyDevelopments in Turkeywith special reference to the with special reference to the AK-Party Era AK-Party Era (2002-04)(2002-04)
Aykut KibritçioğluAykut KibritçioğluAssociate Professor of EconomicsAnkara University, TurkeyTel.: (+90-312) 319 77 20, ext. 340Fax: (+90-312) 319 77 36E-Mail: [email protected] Homepage: http://dialup.ankara.edu.tr/~kibritci/wiiw.html
Vienna, 1-15 November 2004
Kibritçioğlu, November 1-15, 2004, (2/79)
Outline of the PresentationOutline of the Presentation General Facts and Figures, 1970-2004 Political Climate, 1969-2004 Market for Goods: Inflation & Disinflation Market for Goods: Production &
Productivity Labor Market: Employment & Real Wages Foreign Exchange Market: Exchange Rates,
and Currency Substitution Balance of Payments and External Debts Public Sector: Deficits and Debts Financial Sector Statistical Sources Appendix: Selected Macroeconomic
Indicators for Turkey (1970-2003)
Kibritçioğlu, November 1-15, 2004, (3/79)
GeneralGeneralFacts and Figures, Facts and Figures,
1970-20041970-2004
Kibritçioğlu, November 1-15, 2004, (4/79)
The 1980-1989 TransformationThe 1980-1989 TransformationThe 1980-1989 TransformationThe 1980-1989 Transformation
1978 - 1980:1978 - 1980: Balance-of-payments crisis, productivity slowdown and accelerating inflation
January 1980:January 1980: Announcement of a substantial stabilization and structural adjustment program in order to gradually liberalize the economy
1980 - 1982:1980 - 1982: Domestic financial liberalization
May 1981:May 1981: Abandonment of the fixed exchange-rate regime
June 1984 June 1984 -- August 1989: August 1989: Capital account liberalization and convertibility of the Turkish lira
Kibritçioğlu, November 1-15, 2004, (5/79)
Post-1989 Macroeconomic Post-1989 Macroeconomic DevelopmentsDevelopments
Post-1989 Macroeconomic Post-1989 Macroeconomic DevelopmentsDevelopments
December 1993 - April 1994:December 1993 - April 1994: A major currency crisis and acceleration in the inflation
August 1999:August 1999: Negative macroeconomic impacts of the Marmara earthquake
December 1999:December 1999: Announcement of an exchange-rate-based stabilization program for 2000-2002
November 2000 & February 2001:November 2000 & February 2001: Two successive banking and currency crises and political instability in Turkey
May 2001:May 2001: Announcement of the new economic program
Kibritçioğlu, November 1-15, 2004, (6/79)
Consumer Price
Inflation (%)
Real GDP Growth
(%)
Change in Nominal TL/US$
Exchange Rate (%)
JP Morgan's Real
Effective Exchange
Rate (1990=100)
Absolute Change in Central Bank's
Gross Foreign Exchange
Reserves (millions of USD)
Change in Average
Crude Oil Import
Price (%)
Foreign Exchange
Deposits to Money
Supply M2 (%)
1970-1979 23.3 4.7 14.0 151.4 53 30.5 0.0
1980 110.2 - 2.4 144.3 87.7 419 110.5 0.0
1981-1988 42.4 5.4 44.9 113.4 154 - 8.3 12.8
1989-1993 65.1 4.9 51.4 105.6 781 2.8 46.0
1994 106.3 - 5.5 169.9 137.1 899 - 2.1 94.9
1995-1999 80.7 4.0 70.2 129.9 3 213 5.3 90.5
2000-2001 54.7 - 0.1 72.5 121.4 - 2 195 21.5 103.6
2002-2003 35.1 6.9 11.0 113.1 7 414 8.8 103.5
1970-2003 49.9 4.1 46.7 126.2 985 13.2 38.1
Source: State Institute of Statistics (SIS), Central Bank of Republic of Turkey (CBRT), State Planning Organization (SPO), the IMF and J.P.Morgan; Kibritçioğlu’s calculations.
Selected Macroeconomic Indicators Selected Macroeconomic Indicators [1][1]
Selected Macroeconomic Indicators Selected Macroeconomic Indicators [1][1]
annualperiod
averages
annualperiod
averages
Kibritçioğlu, November 1-15, 2004, (7/79)
Change in Nominal Money
Supply M2 (%)
Public Sector Borrowing
Requirement to GDP (%)
Official Unemploy-ment Rate
(%)
Capacity Utilization in the Manufac-
turing Industry (%)
Istanbul Stock
Exchange's Composite 100 Index in
USD (1986=1.0)
Current Account Balance (millions of USD)
Short-Term Capital Inflow
(millions of USD)
Actual Foreign Direct
Investment Inflow
(millions of USD)
1970-1979 31.4 6.1 56.9 - 986 97
1980 74.5 8.9 8.3 55.2 - 3 408 - 2 35
1981-1988 53.3 4.5 7.9 67.8 2.4 - 992 53 125
1989-1993 59.9 9.2 8.1 75.6 5.2 - 1 769 757 727
1994 123.2 7.9 8.1 72.9 4.2 2 631 - 5 190 608
1995-1999 104.7 9.4 6.8 77.0 6.7 - 1 355 1 726 827
2000-2001 45.2 14.4 7.5 73.4 9.2 - 3 215 - 3 561 2 124
2002-2003 32.3 10.6 10.5 76.9 4.6 - 4 165 1 495 440
1970-2003 56.4 7.8 7.9 71.6 5.5 - 1 440 138 606
Source: State Institute of Statistics (SIS), Central Bank of Republic of Turkey (CBRT), State Planning Organization (SPO), the IMF and J.P.Morgan; Kibritçioğlu’s calculations.
Selected Macroeconomic Indicators Selected Macroeconomic Indicators [2][2]
Selected Macroeconomic Indicators Selected Macroeconomic Indicators [2][2]
annualperiod
averages
annualperiod
averages
Kibritçioğlu, November 1-15, 2004, (8/79)
Political Climate,Political Climate,1969-20041969-2004
Kibritçioğlu, November 1-15, 2004, (9/79)
Governments & Political InstabilityGovernments & Political Instabilityin Turkeyin Turkey, 1969-2004, 1969-2004
1969-2004 = 36 years = 432 months Average period between two general elections = 48
months = 4 years Average life of governments = 15.4 months = 1.3 years
(ICRG=International Country Risk Guide; a declining PR index indicates an increase in the political risk.)
The Frequency of General Elections and Government Changes in Turkey (Jan. 1969 - Dec. 2004)
19
69
.01
19
70
.01
19
71
.01
19
72
.01
19
73
.01
19
74
.01
19
75
.01
19
76
.01
19
77
.01
19
78
.01
19
79
.01
19
80
.01
19
81
.01
19
82
.01
19
83
.01
19
84
.01
19
85
.01
19
86
.01
19
87
.01
19
88
.01
19
89
.01
19
90
.01
19
91
.01
19
92
.01
19
93
.01
19
94
.01
19
95
.01
19
96
.01
19
97
.01
19
98
.01
19
99
.01
20
00
.01
20
01
.01
20
02
.01
20
03
.01
20
04
.01
35
40
45
50
55
60
65
70
75
Government Changes (28 times) ICRG's Political Risk Index for Turkey General Elections (9 times)
Kibritçioğlu, November 1-15, 2004, (10/79)
Selected Events MarkedSelected Events Marked as Black as Black Columns Columns in the Following Figuresin the Following Figures
areare:: January 1999:
4. Ecevit-Government starts...
May 1999:5. Ecevit-Government starts...
January 2000:2000-2003 Program introduced...
November 2000 and February 2001:Financial crisis occurred...
November 2002:General elections & AK-Party-Government starts...
Kibritçioğlu, November 1-15, 2004, (11/79)
Market for Goods:Market for Goods:Inflation & DisinflationInflation & Disinflation
Kibritçioğlu, November 1-15, 2004, (12/79)
In the late 1990s, Turkey was not able to join the global disinflation process observed explicitly...
Global Inflation & Disinflation and Turkey
0.1
1.0
10.0
100.0
1000.0
10000.0
100000.0
19
49
19
51
19
53
19
55
19
57
19
59
19
61
19
63
19
65
19
67
19
69
19
71
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
MaximumInflation Rate(worldwide)
Turkey
DevelopingCountries
World Average
United States
Austria
Annual Consumer Price Inflation(%, log scale)
Kibritçioğlu, November 1-15, 2004, (13/79)
In terms of the length of the period, Turkish high-inflation experience is “unique” in the world...
Relative Inflation Rates: Turkey's CPI Inflation vs. Foreign CPI Inflation
0
5
10
15
20
25
30
35
40
45
50
55
60
6519
69
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Turkey /IndustrialCountries
Turkey / WorldAverage
Turkey /Middle East
Turkey /DevelopingCountries
Kibritçioğlu, November 1-15, 2004, (14/79)
Turkey suffered from high and persistent inflation since more than three decades. But, finally, it’s declining now...
Annual & Monthly Consumer Price Inflation (%, Feb.1969-Sep.2004)
-5
5
15
25
35
45
55
65
75
85
95
105
115
125
135
14519
69.0
119
70.0
119
71.0
119
72.0
119
73.0
119
74.0
119
75.0
119
76.0
119
77.0
119
78.0
119
79.0
119
80.0
119
81.0
119
82.0
119
83.0
119
84.0
119
85.0
119
86.0
119
87.0
119
88.0
119
89.0
119
90.0
119
91.0
119
92.0
119
93.0
119
94.0
119
95.0
119
96.0
119
97.0
119
98.0
119
99.0
120
00.0
120
01.0
120
02.0
120
03.0
120
04.0
1
monthly
annual
Kibritçioğlu, November 1-15, 2004, (15/79)
Annual inflation rates fell below 15 percent as end of September 2004. (Official target for Dec. 2004: 12 percent)
Inflationary expectations in the country are also changing in a positive direction.
Annual Changes in Wholesale and Consumer Price Indices (SIS, percent)
11.9
7.50
10
20
30
40
50
60
70
80
90
1998
.01
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events WPI CPI
Kibritçioğlu, November 1-15, 2004, (16/79)
Market for Goods:Market for Goods:Production & Production & ProductivityProductivity
Kibritçioğlu, November 1-15, 2004, (17/79)
Indicators of Long-Run Growth in Turkey
Turkey’s economic growth performance was highly volatile.
Real GDP per capita rose 22 times between 1950 and 2000.
1.52.9
7414
340-15
-10
-5
0
5
10
15
20
25
30
19
50
19
51
19
52
19
53
19
54
19
55
19
56
19
57
19
58
19
59
19
60
19
61
19
62
19
63
19
64
19
65
19
66
19
67
19
68
19
69
19
70
19
71
19
72
19
73
19
74
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
0
1000
2000
3000
4000
5000
6000
7000
8000
Growth in Real GDP ($) Per Capita, %
Population Growth, %
Real GDP (TL) Growth, %
Real GDP ($) per Capita [right axis]
PWT6.1
Kibritçioğlu, November 1-15, 2004, (18/79)
50
100
150
200
250
300
350
400
450
500
550
600
650
700
75019
80
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
South Korea
Turkey
Israel
USA
Cyprus
Hungary
Japan
UK
Industrial Countries
Germany
Greece
Romania
Industrial Production Index (1980=100)
Turkish industrial sector demonstrated a remarkable growth performance since 1980.
Kibritçioğlu, November 1-15, 2004, (19/79)
GDP per capita ($): Turkey & Selected Countries
In an international context, however, Turkey’s economic growth performance is relatively poor.
1000
6000
11000
16000
21000
26000
3100019
50
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
USA
Japan
Germany
UK
Israel
Cyprus
South Korea
Greece
Hungary
Turkey
Romania
PWT6.1
Kibritçioğlu, November 1-15, 2004, (20/79)
In recent years, growth rate of the real GDP has significantly fluctuated.
The Turkish real sector is recovering from the 2000-2001 crisis, which is one of the four deepest economic crises after 1950.
Annual Real GDP Growth (SIS, percent)
13.4
-12-9-6-30369
1215
19
98
Q1
19
98
Q2
19
98
Q3
19
98
Q4
19
99
Q1
19
99
Q2
19
99
Q3
19
99
Q4
20
00
Q1
20
00
Q2
20
00
Q3
20
00
Q4
20
01
Q1
20
01
Q2
20
01
Q3
20
01
Q4
20
02
Q1
20
02
Q2
20
02
Q3
20
02
Q4
20
03
Q1
20
03
Q2
20
03
Q3
20
03
Q4
20
04
Q1
20
04
Q2
20
04
Q3
20
04
Q4
Kibritçioğlu, November 1-15, 2004, (21/79)
During the AK-Party era, the industrial production index increased again up to the pre-crisis level.
Industrial Production Index (SIS, 1997=100)
80859095
100105110115120125130
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
mov.ave.
Kibritçioğlu, November 1-15, 2004, (22/79)
Annual increases in the industrial production index sharply fluctuate around an average annual growth of 10 percent, during the AK-Party era.
Annual Increases in the Industrial Production Index (SIS, %)
-20-15-10
-505
1015202530
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
mov.ave.
Kibritçioğlu, November 1-15, 2004, (23/79)
Capacity utilization ratio in manufacturing industry also increased up to the pre-crisis level in recent months.
Capacity Utilization Ratio in Manufacturing Industry (SIS, %)84.8
68707274767880828486
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Kibritçioğlu, November 1-15, 2004, (24/79)
The monthly ratio of the number of new firms established to the number of the closed ones was fluctuating around 16 within the last two years.
Ratio of the Number of New Firms to the Number of Closed Firms (SIS, %)
0
5
10
15
20
25
30
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
mov.ave.
Kibritçioğlu, November 1-15, 2004, (25/79)
The manufactuing industry exhibits a remarkable increase in labor productivity.
The reasons for that are still not investigated by economists sufficiently.
Partial Productivity per Worker in Manufacturing Industry (1997=100)
90
100
110
120
130
140
150
160
19
98
Q1
19
98
Q2
19
98
Q3
19
98
Q4
19
99
Q1
19
99
Q2
19
99
Q3
19
99
Q4
20
00
Q1
20
00
Q2
20
00
Q3
20
00
Q4
20
01
Q1
20
01
Q2
20
01
Q3
20
01
Q4
20
02
Q1
20
02
Q2
20
02
Q3
20
02
Q4
20
03
Q1
20
03
Q2
20
03
Q3
20
03
Q4
20
04
Q1
20
04
Q2
20
04
Q3
20
04
Q4
Kibritçioğlu, November 1-15, 2004, (26/79)
Labor Market:Labor Market:Employment &Employment &
Real WagesReal Wages
Kibritçioğlu, November 1-15, 2004, (27/79)
The increases in manufacturing production are not fully accommodated by increases in employment.
Turkey has still to solve the unemployment problem that has been deepened after the 2000-2001 financial crisis.
Employment Index for the Manufacturing Industry (1997=100)
75
80
85
90
95
100
105
19
98
Q1
19
98
Q2
19
98
Q3
19
98
Q4
19
99
Q1
19
99
Q2
19
99
Q3
19
99
Q4
20
00
Q1
20
00
Q2
20
00
Q3
20
00
Q4
20
01
Q1
20
01
Q2
20
01
Q3
20
01
Q4
20
02
Q1
20
02
Q2
20
02
Q3
20
02
Q4
20
03
Q1
20
03
Q2
20
03
Q3
20
03
Q4
20
04
Q1
20
04
Q2
20
04
Q3
20
04
Q4
mov.ave.
Kibritçioğlu, November 1-15, 2004, (28/79)
Real wages in manufacturing industry declined significantly following the 2000-2001 crisis.
They shrinked about 18 percent during the crisis.
Real-Wage per Hour-Worked in Manufacturing Industry (1997=100)
80
85
90
95
100
105
110
115
120
19
98
Q1
19
98
Q2
19
98
Q3
19
98
Q4
19
99
Q1
19
99
Q2
19
99
Q3
19
99
Q4
20
00
Q1
20
00
Q2
20
00
Q3
20
00
Q4
20
01
Q1
20
01
Q2
20
01
Q3
20
01
Q4
20
02
Q1
20
02
Q2
20
02
Q3
20
02
Q4
20
03
Q1
20
03
Q2
20
03
Q3
20
03
Q4
20
04
Q1
20
04
Q2
20
04
Q3
20
04
Q4
Kibritçioğlu, November 1-15, 2004, (29/79)
Foreign Exchange Foreign Exchange Market:Market:
Exchange Rates, and Exchange Rates, and Currency SubstitutionCurrency Substitution
Kibritçioğlu, November 1-15, 2004, (30/79)
Since May 1981, Turkey has a relatively flexible exchange rate system. This gradually removed the “black-market” for FX in Turkey.
In 2000, the monthly growth rates of nominal exchange rates were pre-determined to gradually disinflate the economy.
0
1
2
3
4
5
6
7
8
9
50.0
1
52.0
1
54.0
1
56.0
1
58.0
1
60.0
1
62.0
1
64.0
1
66.0
1
68.0
1
70.0
1
72.0
1
74.0
1
76.0
1
78.0
1
80.0
1
82.0
1
84.0
1
86.0
1
88.0
1
90.0
1
92.0
1
94.0
1
96.0
1
98.0
1
00.0
1
02.0
1
04.0
1
-35
0
35
70
105
140
175
210
245BMER / OER (left axis) Annual Increases in OER (right axis)
“Black-Market” Exchange Rates (BMER) vs. Official Exchange Rates (OER)and Annual Increases in OER (1950-2004)
Kibritçioğlu, November 1-15, 2004, (31/79)
During the last 27 months, nominal exchange rates seems to float around a specific level, without showing any tendency towards a sharp increase.
Nominal Exchane Rates (TL/USD and TL/Euro)
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
200000019
98.0
1
1998
.05
1998
.09
1999
.01
1999
.05
1999
.09
2000
.01
2000
.05
2000
.09
2001
.01
2001
.05
2001
.09
2002
.01
2002
.05
2002
.09
2003
.01
2003
.05
2003
.09
2004
.01
2004
.05
2004
.09
Selected Events TL/USD Exchange Rate TL/Euro Exchange Rate
Kibritçioğlu, November 1-15, 2004, (32/79)
Note that annual growth rate of nominal USD exchange rates turned to negative values between May 2003 and April 2004.
Annual Changes in Nominal Exchange Rates (percent)
5.4
9.9
-30
-15
0
15
30
45
60
75
90
105
120
135
150
1998
.01
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events TL/USD Exchange Rate TL/Euro Exchange Rate
Kibritçioğlu, November 1-15, 2004, (33/79)
Following the 2000-2001 crisis, gross FX reserves of the Turkish Central Bank increased significantly.
They are now about 38 percent higher than the level of reserves prior to the crisis.
Central Bank's Gross Foreign Exchange Reserves (billion USD)
33.7
15
18
21
24
27
30
33
36
19
98
.01
19
98
.04
19
98
.07
19
98
.10
19
99
.01
19
99
.04
19
99
.07
19
99
.10
20
00
.01
20
00
.04
20
00
.07
20
00
.10
20
01
.01
20
01
.04
20
01
.07
20
01
.10
20
02
.01
20
02
.04
20
02
.07
20
02
.10
20
03
.01
20
03
.04
20
03
.07
20
03
.10
20
04
.01
20
04
.04
20
04
.07
20
04
.10
October 2000 level
Kibritçioğlu, November 1-15, 2004, (34/79)
The so-called foreign exchange market pressure index does not send any signs of an increase in pressure in the market, while it is observed that banking sector is acting more and more risky again.
Foreign Exchange Market Pressure and Banking Sector Fragility
-4.0
-2.0
0.0
2.0
4.0
6.0
8.019
98.0
1
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events Foreign Exchange Market Pressure Index Banking Sector Fragility Index
Kibritçioğlu, November 1-15, 2004, (35/79)
The real appreciation of the Turkish lira against major foreign currencies following the 2000-2001 crisis seems to have stopped within the last 12 months.
CPI-Based Real Effective Exchange Rates (CBRT, 1995=100)
6065707580859095
100105
19
98
.01
19
98
.04
19
98
.07
19
98
.10
19
99
.01
19
99
.04
19
99
.07
19
99
.10
20
00
.01
20
00
.04
20
00
.07
20
00
.10
20
01
.01
20
01
.04
20
01
.07
20
01
.10
20
02
.01
20
02
.04
20
02
.07
20
02
.10
20
03
.01
20
03
.04
20
03
.07
20
03
.10
20
04
.01
20
04
.04
20
04
.07
20
04
.10
increases: real depreciationdecreases: real appreciation
mov.ave.
inverseof the CBRT'soriginal index
Kibritçioğlu, November 1-15, 2004, (36/79)
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
FX Deposits to M2
Currency Substitution in Turkey (1985-2004)
High inflation and low credibility of government policies in the 1990s created a strong currency substitution. But it’s changing now...
Kibritçioğlu, November 1-15, 2004, (37/79)
There is a tendency towards reverse currency substitution during the AK-Party era.
Government’s success in disinflating the economy and its increasing credibility may significantly be contributing to this process.
Two Indicators of Currency Substitution in Turkey (%)
30
50
70
90
110
130
15019
98.0
1
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events Foreign Exchange Deposits / TL-denominated Deposits (M2Y - M2) / M2
Kibritçioğlu, November 1-15, 2004, (38/79)
Balance of Balance of Payments and Payments and External DebtsExternal Debts
Kibritçioğlu, November 1-15, 2004, (39/79)
0
10
20
30
40
50
60
70
80
90
100
110
1925
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
Custom Duties / Imports (%) Taxes on Foreign Trade / Imports (%)
History of Taxation in Turkish International Trade in Goods (1925-2002)
Ken
ned
y (196
7)
To
kyo
(1979)
Uru
gu
ay (1986-
1993)
GA
TT
(194
7)
Cu
stom
s Un
ion
with
the E
U
(1996)
Foreign trade liberalization in Turkey is closely associated to Turkey’s relations to the GATT/WTO and the European Union (EU).
Kibritçioğlu, November 1-15, 2004, (40/79)
0.00
0.25
0.50
0.75
1.00
1.2519
69
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Bilateral (TL/USD) Real Exchange Rates (1995=1.0)Official Exchange Rates / Black-Market Exchange RatesExports-to-Imports Ratio in ManufacturingImport Penetration RatioTax-Rebate Ratio for ExportsTaxes on Foreign-Trade to Imports RatioCustoms-Duties to Imports Ratio
1969-1980: import-substituion era1979-1980: real-sector and balance-of-payments crises1980-1984: current-account liberalization and exports promotionMay 1981: abondonment of fixed exchange rates1989: capital-account liberalization1994: major currency crisis2000-2001: triple crises (banking, currency & real-sector)
Foreign trade liberalization in the 1980s positively affected Turkey’s trade in goods with the rest of the world.
Kibritçioğlu, November 1-15, 2004, (41/79)
Exports to Imports Ratio in Turkey (1923-2003, annual)
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.001
92
31
92
51
92
71
92
91
93
11
93
31
93
51
93
71
93
91
94
11
94
31
94
51
94
71
94
91
95
11
95
31
95
51
95
71
95
91
96
11
96
31
96
51
96
71
96
91
97
11
97
31
97
51
97
71
97
91
98
11
98
31
98
51
98
71
98
91
99
11
99
31
99
51
99
71
99
92
00
12
00
3
Kibritçioğlu, November 1-15, 2004, (42/79)
Exports to Imports Ratio in Turkey (1950-2004, monthly)
The share of the agricultural products on exports decreased in Turkey, and the volatility of exports to imports ratio in Turkey declined since early 1980s.
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
50.0
1
52.0
1
54.0
1
56.0
1
58.0
1
60.0
1
62.0
1
64.0
1
66.0
1
68.0
1
70.0
1
72.0
1
74.0
1
76.0
1
78.0
1
80.0
1
82.0
1
84.0
1
86.0
1
88.0
1
90.0
1
92.0
1
94.0
1
96.0
1
98.0
1
00.0
1
02.0
1
04.0
1
mov.ave.
Kibritçioğlu, November 1-15, 2004, (43/79)
The developments in the exports to imports ratio show that foreign trade deficits are increasing since early 2002.
Exports to Imports Ratio (SIS, percent, as of 12-monthly totals)
64.4
73.6
4550556065707580859095
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
manufacturing
total
Kibritçioğlu, November 1-15, 2004, (44/79)
Export and Import Price Indices(1982=100, monthly averages)
70
80
90
100
110
120
130
1982
.12
1983
.12
1984
.12
1985
.12
1986
.12
1987
.12
1988
.12
1989
.12
1990
.12
1991
.12
1992
.12
1993
.12
1994
.12
1995
.12
1996
.12
1997
.12
1998
.12
1999
.12
2000
.12
2001
.12
2002
.12
2003
.12
2004
.12
External Terms of Trade Export Price Index Import Price Index 1982=100
Kibritçioğlu, November 1-15, 2004, (45/79)
Goods Composition of Turkish Exports and Imports(1969-2003, ISIC, percent)
Exports Imports
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Agriculture
ManufacturingMining &
Quarrying
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Agriculture
Manufacturing
Mining & Quarrying
Kibritçioğlu, November 1-15, 2004, (46/79)
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
19
69
19
71
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
Consumption Goods
Intermediate Goods
Inv.G.
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
19
69
19
71
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
Consumption Goods
Intermediate Goods
Investment Goods
Goods Composition of Turkish Exports and Imports(1969-2003, BEC, percent)
Exports Imports
Kibritçioğlu, November 1-15, 2004, (47/79)
0
10
20
30
40
50
60
70
80
90
100
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Other Countries
Developing Western Hemisphere
Developing Middle East
Developing Europe
Developing Asia
Developing Africa
EU15
Industrial Countries (excl. EU15)
Country Composition of Turkish Exports (1980-2003, percent)
Kibritçioğlu, November 1-15, 2004, (48/79)
Country Composition of Turkish Imports (1980-2003, percent)
0
10
20
30
40
50
60
70
80
90
100
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Other Countries
Developing Western Hemisphere
Developing Middle East
Developing Europe
Developing Asia
Developing Africa
EU15
Industrial Countries (excl. EU15)
Kibritçioğlu, November 1-15, 2004, (49/79)
The increasing deficit in net exports of goods is eliminated by an increasing surplus in net exports of services, and hence the CAB deficits are declining since March 2004.
Current Account Balance: Selected Indicators (SIS, billion USD, monthly)
-2.60
-1.95
-1.30
-0.65
0.00
0.65
1.301
99
8.0
1
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Selected Events Net Exports of Goods (billion TL)
Net Exports of Goods and Services (billion TL) Current Account Balance (billion TL)
Kibritçioğlu, November 1-15, 2004, (50/79)
Current Account Balance: Selected Indicators (SIS, billion USD, cumulative)
-21.9
-9.8
-12.3
-24
-20
-16
-12
-8
-4
0
4
8
1998
.01
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events Net Exports of Goods (billion TL)
Net Exports of Goods and Services (billion TL) Current Account Balance (billion TL)
However, the cumulative BoP data shows that the recent improvements have not fully translated into the annual data yet.
In 2003, the CAB/GDP ratio amounted to -2.8%. However, it will possibly climb to -4% in 2004.
Kibritçioğlu, November 1-15, 2004, (51/79)
-12
-10
-8
-6
-4
-2
0
2
4
6
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Erratic Nature of Net Short-Term Capital Inflows(billion USD, annual data)
capitalcapitalaccountaccount
liberalizationliberalization
capitalcapitalaccountaccount
liberalizationliberalization
19941994crisiscrisis19941994crisiscrisis
2000-012000-01crisiscrisis
2000-012000-01crisiscrisis
Kibritçioğlu, November 1-15, 2004, (52/79)
Net Short-Term Capital Inflows (billion USD)
-14-12-10-8-6-4-202468
1986
.01
1987
.01
1988
.01
1989
.01
1990
.01
1991
.01
1992
.01
1993
.01
1994
.01
1995
.01
1996
.01
1997
.01
1998
.01
1999
.01
2000
.01
2001
.01
2002
.01
2003
.01
2004
.01
monthly 12-monthly
One indication that Turkey’s policies are on the right track would be a return to positive short-term inflows at a steady and sustainable level. But a substantial increase in longer term capital inflows is not observed in Turkey.
capitalcapitalaccountaccount
liberalizationliberalization
capitalcapitalaccountaccount
liberalizationliberalization
Kibritçioğlu, November 1-15, 2004, (53/79)
Short-term capital outflows that rose following the 2000-2001 financial crisis declined significantly after January 2002.
Net short-term capital inflows (in terms of cummulative data) are positive in 2004.
Net Short-Term Capital Inflows (billion USD)
2.6
5.45.4
-12.3
-15
-12
-9
-6
-3
0
3
6
1998
.01
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events Monthly 12-monthly
Kibritçioğlu, November 1-15, 2004, (54/79)
The effects of both current and capital account liberalizations realized in the 1980s can roughly be followed by the fluctuations in the CAB to GDP and net short term capital inflows to GDP ratios.
Current Account Balance to GDP & Net Short-Term Capital Inflows to GDP (%)
-9
-8
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
CAB to GDP Net Short-Term Capital Inflows to GDP
currentaccountliberalization
capitalaccount
liberalization
Kibritçioğlu, November 1-15, 2004, (55/79)
The monthly data shows that the volatility of the CAB to nominal industrial output is significantly lower than that of the net short-term capital inflows to output ratio.
Current Account Balance to Output & Net Short-Term Capital Inflows to Output(January 1999 = 1.0; as of 12-monthly cummulatives)
-2.8
2.11.0
-25
-20
-15
-10
-5
0
5
10
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Selected Events Current Account Balance to Output Net Short-Term Capital Inflows to Output
Kibritçioğlu, November 1-15, 2004, (56/79)
Political Process(Voters, Political Parties &
Bureaucrats)
Political Process(Voters, Political Parties &
Bureaucrats)
““Hot Money” Mechanism in Hot Money” Mechanism in TurkeyTurkey
High Public Sector Deficits
High Public Sector Deficits
High Real International Interest
Rate Differential
High Real International Interest
Rate Differential
Decreasing or Stable Nominal Exchange
Rates
Decreasing or Stable Nominal Exchange
Rates
Net Short-TermCapital Inflows from Abroad
Net Short-TermCapital Inflows from Abroad
interest rate parityinterest rate parity
......
It‘s not only “capital account
liberalization” itself which caused
macroeconomic problems in Turkey
after 1989.
It‘s not only “capital account
liberalization” itself which caused
macroeconomic problems in Turkey
after 1989.
But everything changes,if there is a CC at the door…
But everything changes,if there is a CC at the door…
high inflationhigh inflation
upward pressure on FX rates
upward pressure on FX rates
Kibritçioğlu, November 1-15, 2004, (57/79)
Years
Cumulative FDI Permits
(million USD)
Annual FDI Permits (million
USD)
Share of Manufacturing
Industry on Authorized FDI
(%)
Number of Foreign Capital
Companies
Total Capital of Foreign Capital
Companies (bill. TL)
Realized FDI Inflows (million
USD)
Realized FDI Outflows (million
USD)
Net FDI Inflows (million
USD)
1980 97 97 91.5 78 283901981 435 338 73.0 109 47400 141 46 951982 602 167 59.0 147 100196 103 48 551983 704 103 86.6 166 147109 87 41 461984 976 271 68.5 235 254775 113 0 1131985 1210 234 60.9 408 464981 99 0 991986 1574 364 53.2 619 707164 125 0 1251987 2229 655 44.9 836 960035 115 0 1151988 3050 821 59.8 1172 1597103 354 0 3541989 4562 1512 62.8 1525 4847832 663 0 6631990 6423 1861 65.2 1856 7943775 684 0 6841991 8390 1967 55.7 2123 13101036 907 97 8101992 10210 1820 70.0 2330 23441214 911 67 8441993 12274 2063 76.0 2554 36737050 746 110 6361994 13751 1478 74.9 2830 62449964 636 28 6081995 16690 2938 68.0 3161 113013790 934 49 8851996 20525 3836 16.7 3582 235971182 914 192 7221997 22204 1678 52.0 4068 458968459 852 47 8051998 23850 1646 61.8 4533 823560554 953 13 9401999 25550 1700 66.1 4950 1446503 813 30 7832000 29027 3477 31.8 5328 3063464 1707 725 9822001 31752 2725 45.7 5841 6184411 3288 22 32662002 33995 2243 39.8 6280 10092737 590 5 585
2003 * 35203 1208 58.8 6511 12605285 414 8 406
FDI inflows into Turkey are far from being sufficient to improve the economy: Only 16.1 billions of USD within 23 years...
Kibritçioğlu, November 1-15, 2004, (58/79)
In 2003, Turkey’s GDP amounted to 240 billion USD, while its total external debts reached to 147 billion USD.
95 out of 147 billion USD amounting total debts are created solely by the public sector.
Selected Indicators of External Debts of Turkey (percent)
61.9
53.9
17.6
0102030405060708090
1998
Q1
1998
Q2
1998
Q3
1998
Q4
1999
Q1
1999
Q2
1999
Q3
1999
Q4
2000
Q1
2000
Q2
2000
Q3
2000
Q4
2001
Q1
2001
Q2
2001
Q3
2001
Q4
2002
Q1
2002
Q2
2002
Q3
2002
Q4
2003
Q1
2003
Q2
2003
Q3
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
Selected Events Public Sector's Share on Total Debts Total External Debts to GDP Short-Term to Total Debts
Kibritçioğlu, November 1-15, 2004, (59/79)
The ratio of international reserves to short-term external debts increased significantly after the 2000-2001 financial crisis, but in the AK-Party era it declined again slightly.
Reserves vs. External Debts (percent)
30.729.4 36.8
113.3
250.5
174.1
020406080
100120140160180200220240260280
1998
Q1
1998
Q2
1998
Q3
1998
Q4
1999
Q1
1999
Q2
1999
Q3
1999
Q4
2000
Q1
2000
Q2
2000
Q3
2000
Q4
2001
Q1
2001
Q2
2001
Q3
2001
Q4
2002
Q1
2002
Q2
2002
Q3
2002
Q4
2003
Q1
2003
Q2
2003
Q3
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
Selected Events Net International Reserves to Total External Debts
Central Bank's FX Reserves to Public Sector's External Debts Net International Reserves to Short-Term External Debts
Kibritçioğlu, November 1-15, 2004, (60/79)
Public Sector:Public Sector:Deficits and DebtsDeficits and Debts
Kibritçioğlu, November 1-15, 2004, (61/79)
The PSBR is a better indicator of the public sector in Turkey because it also covers the non-CB public institutions.
The PSBR is diminishing since three years, while the non-interest PSBR is improving.
Public Sector Borrowing Requirement (PSBR) and Consolidated Budget Balance (CBB)
-18
-15
-12
-9
-6
-3
0
3
6
9
1219
75
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Non-interest PSBR to GDP PSBR to GDP
Non-interest CB to GDP CB to GDP
Kibritçioğlu, November 1-15, 2004, (62/79)
Non-interest (primary) consolidated budget balance (CBB) seems to be stabilized with respect to nominal output growth, while the CBB (incl. interest payments) is diminishing since late 2003 again.
Cumulative Consolidated Budget Balance / Average Nominal Industrial Production
-150
-125
-100
-75
-50
-25
0
25
50
7519
98.0
1
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events Primary Balance to Nominal Output CB Balance to Nominal Output
Kibritçioğlu, November 1-15, 2004, (63/79)
As a result of both the successful disinflationary policies and the Government’s increasing political credibility, Turkish Treasury pays now lower interest rates in domestic borrowing.
Compound, Weighted Auction Interest-Rates (Treasury, percent) & Confidence Index
25.4
193.7
15.1
-20
0
20
40
60
80
100
120
140
160
180
200
1998
.01
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events Nominal Reel (ex ante) Reel (ex post) Real Sector Confidence Index
Kibritçioğlu, November 1-15, 2004, (64/79)
Public sector’s domestic debts increased sharply following the 2000-2001 crisis, both in nominal and real terms.
Domestic Debt Stock of the Public Sector (billion TL)
0
50000000
100000000
150000000
200000000
25000000019
98.0
1
1998
.05
1998
.09
1999
.01
1999
.05
1999
.09
2000
.01
2000
.05
2000
.09
2001
.01
2001
.05
2001
.09
2002
.01
2002
.05
2002
.09
2003
.01
2003
.05
2003
.09
2004
.01
2004
.05
2004
.09
Selected Events nominal, billion TL real, billion TL
Kibritçioğlu, November 1-15, 2004, (65/79)
Public sector’s domestic debts in terms of USD are also increasing sharply...
Domestic Debt Stock of the Public Sector (billion USD)
20
40
60
80
100
120
140
160
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Kibritçioğlu, November 1-15, 2004, (66/79)
Public sector’s domestic debts seem to be stabilized with respect to changes in industrial production index within the last two years.
Ave. Domestic Debt Stock of the Public Sector to Ave. Industrial Output (%)
80100120140160180200220240260
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Kibritçioğlu, November 1-15, 2004, (67/79)
Since the latest general elections in November 2002, the public sector’s domestic debts increased more than 65 percent in terms of USD, while its external debts expanded only around 15 percent.
Domestic and External Debts of the Public Sector (billion USD)
45.2
84.9
140.4
53.4 79.9
92.2
0
20
40
60
80
100
120
140
160
180
1998
Q1
1998
Q2
1998
Q3
1998
Q4
1999
Q1
1999
Q2
1999
Q3
1999
Q4
2000
Q1
2000
Q2
2000
Q3
2000
Q4
2001
Q1
2001
Q2
2001
Q3
2001
Q4
2002
Q1
2002
Q2
2002
Q3
2002
Q4
2003
Q1
2003
Q2
2003
Q3
2003
Q4
2004
Q1
2004
Q2
2004
Q3
2004
Q4
Selected Events Domestis Debts of the Public Sector External Debts of the Public Sector
Kibritçioğlu, November 1-15, 2004, (68/79)
Financial SectorFinancial Sector
Kibritçioğlu, November 1-15, 2004, (69/79)
Feb. '02
Aug. '97
Feb
. '01
Sep. '88
Feb. '87
Nov. '83
Aug. '82
May '80
Jun. '79
Dec. '82
Jan. '86
Nov. '90
No
v. '9
1
Oct. '93
Apr. '94
Oct. '94
Jul. '99
Oct
. '00
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5Ja
n-79
Jan-
80
Jan-
81
Jan-
82
Jan-
83
Jan-
84
Jan-
85
Jan-
86
Jan-
87
Jan-
88
Jan-
89
Jan-
90
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
High Fragility BSF3 BSF2
Banking Sector Fragility in TurkeyBanking Sector Fragility in TurkeyBanking Sector Fragility in TurkeyBanking Sector Fragility in Turkey
Turkish banking sector experienced difficulties many times within the last 25 years, as a result of their own excessive risk-taking behavior in the past.
For Methodology: see Kibritçioğlu (2003), “Monitoring ...”.
Kibritçioğlu, November 1-15, 2004, (70/79)
The Turkish banking sector is recovering from the 2000-2001 crisis, and according to the BSF index, it is taking excessive risk again...
(The BSF3 index is a weighted average of real annual changes in foreign liabilities,
claims on private sector, and total deposits.)
Banking Sector Fragility Index
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
For Methodology: see Kibritçioğlu (2003), “Monitoring ...”.
Kibritçioğlu, November 1-15, 2004, (71/79)
The recent developments in the FL to FA ratio indicate that the external open (short) position of Turkish banking system is decreasing now...
Deposit Banks: Foreign Liabilities to Foreign Assets (percent)
708090
100110120130140150160
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Banking Sector Fragility in TurkeyBanking Sector Fragility in TurkeyBanking Sector Fragility in TurkeyBanking Sector Fragility in Turkey
Kibritçioğlu, November 1-15, 2004, (72/79)
The ratio of 1-month to 12-month deposit interest rates exhibits a different pattern after the 2000-2001 financial crisis: It is very close to 100 percent now...
Weighted Deposit Interest Rates: Ratio of 1-Month to 12-Months Interest Rates (percent)
75
95
115
135
155
175
195
215
235
19
98
.01
19
98
.05
19
98
.09
19
99
.01
19
99
.05
19
99
.09
20
00
.01
20
00
.05
20
00
.09
20
01
.01
20
01
.05
20
01
.09
20
02
.01
20
02
.05
20
02
.09
20
03
.01
20
03
.05
20
03
.09
20
04
.01
20
04
.05
20
04
.09
Kibritçioğlu, November 1-15, 2004, (73/79)
1
10
100
1000
10000
10000019
86.0
1
1987
.01
1988
.01
1989
.01
1990
.01
1991
.01
1992
.01
1993
.01
1994
.01
1995
.01
1996
.01
1997
.01
1998
.01
1999
.01
2000
.01
2001
.01
2002
.01
2003
.01
2004
.01
January 1986 = TL 1 January 1986 = USD 1
Istanbul Stock Exchange’s National 100 Istanbul Stock Exchange’s National 100 IndexIndex
Istanbul Stock Exchange’s National 100 Istanbul Stock Exchange’s National 100 IndexIndex
Kibritçioğlu, November 1-15, 2004, (74/79)
-100
0
100
200
300
400
500
600
700
800
900
1987
.01
1988
.01
1989
.01
1990
.01
1991
.01
1992
.01
1993
.01
1994
.01
1995
.01
1996
.01
1997
.01
1998
.01
1999
.01
2000
.01
2001
.01
2002
.01
2003
.01
2004
.01
January 1986 = TL 1 January 1986 = USD 1
Annual Increases in ISE’s National 100 IndexAnnual Increases in ISE’s National 100 IndexAnnual Increases in ISE’s National 100 IndexAnnual Increases in ISE’s National 100 Index
Kibritçioğlu, November 1-15, 2004, (75/79)
ISE’s (İMKB) National 100 index increased mostly during the AK-Party era. Since spring 2004, however, it follows a relatively stable path.
12-Monthly Increases in Istanbul Stock Exchange's National 100 Index
-100
0
100
200
300
400
500
600
1998
.01
1998
.04
1998
.07
1998
.10
1999
.01
1999
.04
1999
.07
1999
.10
2000
.01
2000
.04
2000
.07
2000
.10
2001
.01
2001
.04
2001
.07
2001
.10
2002
.01
2002
.04
2002
.07
2002
.10
2003
.01
2003
.04
2003
.07
2003
.10
2004
.01
2004
.04
2004
.07
2004
.10
Selected Events 1986 = 1 TL 1986 = 1 USD
Kibritçioğlu, November 1-15, 2004, (76/79)
Inflation and interest rates are declining gradually.
In the Turkish manufacturing industry, the labor productivity is increasing and real wages remain low, while the industrial production index is rising again.
There is still a deep unemployment problem in Turkey. Production increases are not fully translated into employment increases yet.
Excessive risk taking behavior of the banking system (in terms of the BSF index) is expected to decline towards historical averages.
Real effective exchange rates do not show an appreciation of Turkish lira anymore.
Further structural reforms, stronger privatization efforts and continuity in political stability are needed in the country.
In Turkey, it is expected that a decision of the heads of EU governments next month in favor of the start of the accession talks for full-membership in early 2005 will positively affect the Turkish economy, particularly in terms of the FDI inflows.
Concluding RemarksConcluding RemarksConcluding RemarksConcluding Remarks
Kibritçioğlu, November 1-15, 2004, (77/79)
Statistical SourcesStatistical Sourcesfor Figures and Tablesfor Figures and Tables
CBRT/TCMB, Electronic Data Distribution System.
SPO/DPT, Main Economic Indicators. UT/HM, Treasury Statistics. ISE/İMKB, Annual Yerabook. IMF/IFS, IFS & DOTS. Penn World Table (PWT), 6.1 Pick’s/World Currency Yearbook
Kibritçioğlu, November 1-15, 2004, (78/79)
AppendixAppendix::Selected Selected
Macroeconomic Macroeconomic Indicators for Turkey,Indicators for Turkey,
1970-20031970-2003
Kibritçioğlu, November 1-15, 2004, (79/79)
Consumer Price
Inflation (%)
Real GDP Growth (%)
Change in Nominal TL/US$
Exchange Rate (%)
JP Morgan's Real Effective
Exchange Rate
(1990=100)
Absolute Change in Central Bank's
Gross Foreign Exchange
Reserves (millions of USD)
Change in Average
Crude Oil Import Price
(%)
Foreign Exchange
Deposits to Money
Supply M2 (%)
Change in Nominal Money
Supply M2 (%)
Public Sector Borrowing
Requirement to GDP (%)
Official Unemploy-ment Rate
(%)
Capacity Utilization in the Manufac-turing
Industry (%)
Istanbul Stock
Exchange's Composite
100 Index in USD
(1986=1.0)
Current Account Balance
(millions of USD)
Short-Term Capital Inflow
(millions of USD)
Actual Foreign Direct
Investment Inflow
(millions of USD)
1970 6.9 3.2 26.4 220.4 176 - 0.7 0.0 21.9 n.a. n.a. n.a. n.a. - 171 n.a. n.a. 1971 15.7 5.6 31.1 259.7 322 21.8 0.0 28.1 n.a. n.a. n.a. n.a. - 109 n.a. n.a. 1972 11.7 7.4 - 5.5 208.3 564 5.8 0.0 26.0 n.a. n.a. n.a. n.a. - 8 n.a. n.a. 1973 15.4 3.3 - 0.1 173.9 716 39.9 0.0 28.4 n.a. n.a. n.a. n.a. 484 n.a. n.a. 1974 15.8 5.6 - 1.6 131.9 - 433 159.0 0.0 25.7 n.a. n.a. n.a. n.a. - 561 n.a. n.a. 1975 19.2 7.2 3.8 123.1 - 561 21.4 0.0 28.0 4.9 n.a. n.a. n.a. - 1 648 40 n.a. 1976 17.4 10.5 10.9 118.2 57 8.2 0.0 23.4 6.9 n.a. n.a. n.a. - 2 029 73 n.a. 1977 27.1 3.4 12.3 107.4 - 331 12.5 0.0 33.8 8.2 n.a. n.a. n.a. - 3 140 968 n.a. 1978 45.3 1.5 35.0 96.2 163 - 1.0 0.0 36.5 3.2 n.a. n.a. n.a. - 1 265 402 n.a. 1979 58.7 - 0.6 27.9 74.9 - 143 37.8 0.0 61.7 7.3 n.a. 56.9 n.a. - 1 413 - 1 000 n.a. 1980 110.2 - 2.4 144.3 87.7 419 110.5 0.0 74.5 8.9 8.3 55.2 n.a. - 3 408 - 2 35 1981 36.6 4.9 46.8 93.1 - 149 - 0.2 0.0 85.0 4.0 7.3 56.7 n.a. - 1 936 121 95 1982 30.8 3.6 45.9 104.1 151 - 9.7 0.0 56.7 3.6 7.2 59.4 n.a. - 952 98 55 1983 31.4 5.0 39.2 110.0 174 - 9.7 0.0 29.8 5.0 7.9 60.3 n.a. - 1 923 798 46 1984 48.4 6.7 61.9 122.4 - 14 - 5.5 5.1 58.0 5.4 7.8 74.3 n.a. - 1 439 - 652 113 1985 45.0 4.2 42.6 122.9 - 219 - 1.2 9.0 55.5 3.6 7.3 70.3 n.a. - 1 013 1 479 99 1986 34.6 7.0 29.3 119.7 348 - 49.5 22.3 42.5 3.7 8.1 70.0 1.0 - 1 465 812 125 1987 38.8 9.5 27.2 119.3 351 27.5 31.5 45.0 6.1 8.5 77.1 4.0 - 806 50 115 1988 73.7 2.1 66.4 115.4 589 - 18.4 34.6 54.1 4.8 8.7 74.8 2.3 1 596 - 2 281 354 1989 63.3 0.3 48.6 105.3 2 524 17.9 29.5 73.3 5.4 8.7 72.8 2.6 938 - 584 663 1990 60.3 9.3 22.9 100.0 1 141 33.1 30.4 51.8 7.5 8.2 75.2 8.9 - 2 625 3 000 684 1991 66.0 0.9 60.2 102.8 - 1 054 - 20.6 44.4 63.6 10.2 7.8 74.0 5.3 250 - 3 020 810 1992 70.1 6.0 64.6 112.2 1 198 - 1.6 55.6 62.9 10.7 8.0 76.4 3.4 - 974 1 396 844 1993 66.1 8.0 60.5 107.7 97 - 14.8 69.9 48.1 12.1 7.7 79.6 5.6 - 6 433 2 994 636 1994 106.3 - 5.5 169.9 137.1 899 - 2.1 94.9 123.2 7.9 8.1 72.9 4.2 2 631 - 5 190 608 1995 88.1 7.2 53.7 131.7 5 279 7.6 99.7 99.4 5.0 6.9 78.6 5.3 - 2 338 3 635 885 1996 80.3 7.0 78.0 134.2 3 882 21.4 89.8 132.8 8.8 6.0 78.0 5.0 - 2 437 2 665 722 1997 85.7 7.5 86.8 127.2 2 146 - 8.8 97.1 93.5 7.9 6.4 79.4 7.8 - 2 638 - 7 805 1998 84.6 3.1 71.6 127.6 1 302 - 35.3 83.8 101.9 9.7 6.8 76.5 7.3 1 984 1 313 940 1999 64.9 - 4.7 61.0 128.6 3 456 41.6 82.2 96.1 15.8 7.6 72.4 8.0 - 1 344 1 024 783 2000 54.9 7.4 48.5 113.9 - 1 005 58.7 79.4 42.5 12.6 6.6 75.9 13.2 - 9 819 4 200 982 2001 54.4 - 7.5 96.5 128.9 - 3 385 - 15.7 127.9 48.0 16.2 8.4 70.9 5.1 3 390 - 11 321 3 266 2002 45.0 7.9 22.9 112.8 8 020 2.8 120.7 31.0 12.6 10.4 75.4 4.2 - 1 522 - 1 279 585 2003* 25.3 5.8 - 0.8 113.5 6 809 14.8 86.4 33.7 8.6 10.6 78.4 4.9 - 6 808 4 269 294
1970-1979 23.3 4.7 14.0 151.4 53 30.5 0.0 31.4 6.1 56.9 - 986 97 1980 110.2 - 2.4 144.3 87.7 419 110.5 0.0 74.5 8.9 8.3 55.2 - 3 408 - 2 35
1981-1988 42.4 5.4 44.9 113.4 154 - 8.3 12.8 53.3 4.5 7.9 67.8 2.4 - 992 53 125 1989-1993 65.1 4.9 51.4 105.6 781 2.8 46.0 59.9 9.2 8.1 75.6 5.2 - 1 769 757 727
1994 106.3 - 5.5 169.9 137.1 899 - 2.1 94.9 123.2 7.9 8.1 72.9 4.2 2 631 - 5 190 608 1995-1999 80.7 4.0 70.2 129.9 3 213 5.3 90.5 104.7 9.4 6.8 77.0 6.7 - 1 355 1 726 827 2000-2001 54.7 - 0.1 72.5 121.4 - 2 195 21.5 103.6 45.2 14.4 7.5 73.4 9.2 - 3 215 - 3 561 2 124 2002-2003 35.1 6.9 11.0 113.1 7 414 8.8 103.5 32.3 10.6 10.5 76.9 4.6 - 4 165 1 495 440 1970-2003 49.9 4.1 46.7 126.2 985 13.2 38.1 56.4 7.8 7.9 71.6 5.5 - 1 440 138 606
Source: State Institute of Statistics (SIS), Central Bank of Republic of Turkey (CBRT), State Planning Organization (SPO), the IMF and J.P.Morgan; Kibritçioğlu’s calculations.