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1. Turkish Economy: Macroeconomic Developments in 2009 and Medium Term Programme (2010-2012)Ahmet Sabri EROGLU, Ph.D.State Planning Organization ECO – 20th Meeting of Regional Planning Council Antalya, Turkey 15 February 2010

2. OUTLINE: World Economy Turkish Economy Measures Against Crisis Medium Term Program

3. WORLD ECONOMY in 2009 and 2010

4. World Output (Annual % Change) (*) Estimate. Source: IMF, World Economic Outlook, January 2010.

5. Estimations for Output Growth (%) Source: IMF, World Economic Outlook, January 2010.

6. World Trade (Annually % Change) (*) Estimate. Source: IMF, World Economic Outlook, January 2010.

7. The Effects of Global Crisis on the Turkish Economy Global Crisis Affected Turkish Economy in Three Channels: • Foreign Trade, • Foreign Financing, • Expectations.

8. GDP (By Production) Growth Rates (Annually % Changes)

9. GDP (By Expenditures) Growth Rates (Annually % Changes)

10. Capacity Utilization Rate – Industrial Production Index

11. Some Indicators for Domestic Demand

12. Consumer Confidence Indices

13. Central Bank - Real Sector Confidence Index

14. Inflation Rate (CPI, 12 Monthly % Changes)

15. 15 Central Bank Short Term Interest Rates (%)

16. 16 Exports(ISIC Rev,3, Billions of Dollars) Source: Turkstat

17. 17 Imports (BEC, Billons of Dollars) Source: Turkstat

18. Foreign Trade (Billions of Dollars)

19. Current Account Deficit(% of GDP)

20. Current Account Balance(Excluding Energy Price Effects , % of GDP)

21. Current Account Deficit Financing (Million of Dollars)

22. Unemployment Rate

23. Central Government Budget Deficit (Billions of TL) (*) Estimation was 62,8 Billons of TL.

24. Central Government Budget Deficit/ GDP (%) (*) Estimation was 6,6 percent.

25. Total Public Debt Stock (EU Definition) / GDP (*) The estimation was 47,3percent.

26. Measures Against Global Crisis (1) Since the second half of 2008; • Expenditures on Infra-structure investments in public sector are increased (GAP and high ways and roads) • Additional measures are to be taken in salary and wages in public sector • Employment packages is introduced, • For specific goods and services, reductions on Private Consumption Taxes and VAT are launched, • Financial supports for SME’s and exporters are increased, • Transfers from Central Government Budget to local administrations are increased, • Credit Guarantee Fund is reorganized,

27. Measures Against Global Crisis (2) • Central Bank introduced some measures by monitoring the liqudity conditions of foreign currency and TL in the money markets. In this perspectives: • Policy rates are reduced by 10,25 percentage points since November 2008 and down to 6,50 percentage in December 2009. • Central Bank extend credits to the banks that are the subject of uncertainty and lack of confidence in the event of acceleration of fund withdrawals and uncertainty and lack of confidence in the banking system, • Foreign currency required reserve ratio was lowered by the Bank, this reduction has provided an additional foreign exchange liquidity for the banking system.

28. Budgetary Cost of Measures (Millions of TL)

29. MEDIUM TERM PROGRAM (2010-2012)

30. Macroeconomic Policies and MainObjectives in the MTP (2010-2012) and in the Annual Program 2010 Main objective of the MTP is to provide a transition of the economy for a sustainable growth period again, In this perspective, public sector has crucial role in reducing the effects of global crisis on economy, • The short term ones focus on increasing consumption expenditures and eliminating bottlenecks in credit system, • While the medium term ones concentrate on permanent increase in production, investment, employment and export in economy.

31. Following growth process would be realized with the leadership of the private sector • Gradual reduction in public sector borrowing requirement, • Maintaining the price stability, are crucial to increase the available resources and the foresight of private sector in investment and production decisions.

32. Constraints The recovery of our country from the influence of the globalcrisis is closely related with the improvements in the world economy. Gradual and uneven recovery in the world economy is expected, Targets in the program are determined by taking also forecasts about foreign economic conjuncture. In many countries especially in the developed ones, rises in the unemployment rates are estimated to continue also in 2010. Due to weak demand and employment conditions, global inflation is estimated to maintain at low levels also in 2010.

34. Current Account Balance (Millions of Dollar)

35. Central Govern. Budget Deficit / GDP (%)

36. Public Sector Primary Surplus / GDP (%)

37. Public Sector Debt Stock (*) / GDP (*) EU Definition

38. Unemployment Rates (%)

39. Structural Reforms in the MTP and in the Annual Program 2010 • Fiscal rules will be implemented. • A new governance model in SEEs will be implemented. • In the financing of investments, the use of public-private collaboration models will be expanded. • Health services and expenditures will be madeefficient. • Appropriateness and efficiency in social aids willbeachieved. • Agricultural supports will be rearranged.

40. Tax reform will be finalized. • Arrangements will be made for the local governments to increase their own revenues and improve their financial management. • Training the man power will be accelerated in thenature that the business world demands. • Forms of flexible employment will be expanded. • Development agencies, of which organizationprocess completed, will be put into operation. • State aids will be made more transparent and efficient. • The efficiency of Credit Guarantee Fund will beincreased.