1 / 22

SEE-5 & Turkey: Macro Challenges Paul Mylonas

N ATIONAL B ANK. BANK OF GREECE - UNIVERSITY OF OXFORD (SEESOX) CONFERENCE ATHENS, 11 February 201 1. SEE-5 & Turkey: Macro Challenges Paul Mylonas Chief Economist, General Manager of Strategy and Governance, National Bank Group.

ehildebrand
Download Presentation

SEE-5 & Turkey: Macro Challenges Paul Mylonas

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. NATIONAL BANK BANK OF GREECE - UNIVERSITY OF OXFORD (SEESOX) CONFERENCE ATHENS, 11 February 2011 SEE-5 & Turkey: Macro Challenges Paul Mylonas Chief Economist, General Manager of Strategy and Governance, National Bank Group Strategy & Economic Research Division

  2. A narrowing of sovereign spreads suggests that markets are more sanguine regarding economic prospects SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Turkey European Periphery Strategy & Economic Research Division p.2

  3. Output growth recovering weakly in SEE SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.3

  4. What is the level of potential growth post crisis? SEE-5 & Turkey: Macro Challenges Strategy & Economic Research Division p.4

  5. Main macroeconomic challenges SEE-5 & Turkey: Macro Challenges • Balanced output growth • Sufficient financing • Monetary and fiscal policy nexus • Progress on structural reforms Strategy & Economic Research Division p.5

  6. Large external imbalances corrected rapidly … but is it permanent or temporary? SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.6

  7. Exports, the main engine of growth, have recovered markedly and suggest competitive and open economies SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia Exports of G&S/GDP = 56.1% (2010E) Exports of G&S/GDP = 32.9% (2010E) Exports of G&S/GDP = 35.0% (2010E) FYROM Albania Turkey Exports of G&S/GDP = 44.0% (2010E) Exports of G&S/GDP = 31.2% (2010E) Exports of G&S/GDP = 27.2% (2010E) Strategy & Economic Research Division p.7

  8. Large output gaps reflected in high unemployment rates, creating political pressures SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.8

  9. Weak recovery in output and external account correction mainly due to a shortage of external financing SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.9

  10. Domestic financing also tight, reflecting both demand and supply factors SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia 2002-2010 CAGR = 39.3% 2010 Loans/GDP = 40.2% 2002-2010 CAGR = 31.5% 2010 Loans/GDP = 72.3% 2002-2010 CAGR = 22.8% 2010 Loans/ GDP = 52.0% FYROM Albania Turkey 2002-2010 CAGR = 36.3% 2010 Loans/GDP = 36.8% 2002-2010 CAGR = 19.3% 2010 Loans/GDP = 45.5% 2002-2010 CAGR = 30.5% 2010 Loans/GDP = 43.3% Strategy & Economic Research Division p.10

  11. FX-denominated loans continue to be the preferred credit instrument, raising banking sector vulnerabilities SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.11

  12. Indeed, non-performing loans continue to rise, lagging the recovery SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.12

  13. Liquidity conditions, although improving as deposit growth is strong, remain tight SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia Deposits: Dec. 10 y-o-y % change = 7.0% Deposits: Dec. 10 y-o-y % change = 8.7% Deposits: Dec. 10 y-o-y % change = 18.0% FYROM Albania Turkey Deposits: Dec. 10 y-o-y % change = 20.3% Deposits: Nov. 10 y-o-y % change = 13.2% Deposits: Dec. 10 y-o-y % change = 13.9% Strategy & Economic Research Division p.13

  14. Strong profitability buffers have kept capital ratios at high levels SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.14

  15. No further room for fiscal policy support, reflecting weak initial conditions, lack of financing and credibility concerns SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.15

  16. Fiscal policy has the capacity to further reduce budget deficits SEE-5 & Turkey: Macro Challenges Strategy & Economic Research Division p.16

  17. Monetary Policy has been the main source of policy accommodation SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.17

  18. MP has had to keep an eye on the exchange rate SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.18

  19. Monetary policy will face the dilemma of closing a large output gap, while commodity price inflation is on the upswing SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Turkey Strategy & Economic Research Division p.19

  20. Further progress on structural reforms, key to a high growth rate, stable macroeconomic and financial environment, and resilience to external shocks SEE-5 & Turkey: Macro Challenges Romania Bulgaria Serbia FYROM Albania Strategy & Economic Research Division p.20

  21. EU membership process acts as a catalyst and provides a much-needed anchor for policy and reform -- efficient absorption of EU funds, another macroeconomic challenge SEE-5 & Turkey: Macro Challenges Strategy & Economic Research Division p.21

  22. Strategy & Economic Research Division

More Related