Turkey's economic outlook in 2009 amid global crisis

Turkish economy has seen impacts of the global financial crisis mainly in the first quarter of 2009, however it has started to recover in recent months in line with global economy.

Turkey's economic outlook in 2009 amid global crisis

Turkish economy has seen impacts of the global financial crisis mainly in the first quarter of 2009, however it has started to recover in recent months in line with global economy.

Turkish economy has contracted in four consecutive quarters this year. First, the economy slowed down following a growth period in seven years in a row, and then it shrank 6.5 percent in the last quarter of 2008. Turkish economy contracted 3.3 percent in the third quarter of 2009 and 8.4 percent in first three quarters of the year.

Contraction in economy led to rise in unemployment in this period. Jobless rate climbed to 16.1 percent in February. Then it started to decline and became 13.4 in September.

Annual consumer prices were slightly up in November while low demand in domestic market had negative effects on prices. However, no significant mobility has been seen in inflation rates.

Exports that faced impacts of contraction in external markets since the beginning of the year were in upward trend in October.

"Inflation"

According to data of the Turkish Statistical Institute, or TUIK, inflation rate, which had seen two-digit figures since the second quarter of 2008, has declined to single-digit figures since the beginning of 2009 due to impacts of economic recession.

Annual inflation rate in November was calculated as 1.51 percent in producer prices and 5.53 percent in consumer prices. In November 2008, it was 12.25 percent and 10.76 percent respectively.

Last year, annual inflation rate was 8.11 percent in producer prices and 10.06 in consumer prices.

"Growth"

Having faced the impacts of the global downturn, Turkish economy contracted 3.3 percent in the third quarter and 8.4 percent in the first nine months of this year.

Turkish economy had contracted 5.7 percent in 2001 financial crisis, but it entered a period of growth for seven consecutive years until 2009. However, the global economic crisis led to negative growth in the last quarter of 2008 and the economy shrank 6.5 percent in fourth quarter of 2008.

Growth rate was 6.2 percent in 2002, 5.3 in 2003, 9.4 in 2004, 8.4 in 2005, 6.9 in 2006, 4.5 in 2007 and 0.9 in 2008. In 2009, Turkish economy suffered 14.7 percent contraction in the first quarter and 7.9 percent in the second.

TUIK figures revealed that gross domestic product was 262.22 million TL in the third quarter and 700.95 million TL in first nine months. Last year it was 950.09 million TL.

"Employment"

Jobless rate was 13.4 percent in September 2009. Unemployment in Turkey was calculated as 15.5 percent in January, 16.1 percent in February, 15.8 percent in March, 14.9 in April, 13.6 in May, 13.0 in June, 12.8 in July and 13.4 in August.

As of September 2009, 22 million people were employed but 3.39 million people were jobless.

Jobless rate was 10.7 percent in the same month of 2008. Annual unemployment rate was 11 percent in 2008.

"Industrial output"

Turkey's industrial output was down 6.8 percent in October 2008, however it started to rise in the same month of 2009. Industrial production increased 6.5 percent for the first time after 15 months of decline. It dropped 0.9 percent in 2008.

Meanwhile, slump in demand led to fall in capacity utilization rate in manufacturing industry. It fell to 70.7 percent in November 2009. Capacity utilization was 72.9 percent in the same period of 2008.

"Budget deficit over 40 bln TL"

Contraction in economic activities in 2009 caused fall in tax collections. Rise in public revenues remained below expectations.

Turkey's budget ran a deficit of 43.23 million TL in January-October period of 2009.

Tax revenues stood at 139.2 billion TL, 0.8 percent below 2008 figures. In the first 10 months of 2009, the budget had a primary surplus of 7.01 billion TL. It was 38.46 billion TL in 2008 in the same period and 33.2 billion TL in whole year.

"Exports in upward trend"

Turkish exports came down after contraction in global markets, however, it achieved an upward trend since October.

According to data of exporters' assemblies, Turkish exports reached 87.6 billion USD in the first 11 months of 2009. Annual exports were 94.79 billion USD since November 2008.

TUIK figures showed that exports stood at 83.21 billion USD in January-October period while imports were 112.84 billion USD. Trade deficit reached 29.63 billion USD.

In 2008, Turkish companies had made exports worth 132.27 billion USD and imports of 201.96 billion USD.

"Balance of payments"

According to balance of payments sheet made public by the Central Bank, Turkey's current account deficit slumped 79.4 percent to 7.9 billion USD in January-October 2009 period from 38.31 billion USD in the same period of 2008.

At the end of 2008, Turkey had a current account deficit of 41.41 billion USD.

"Foreign exchange reserves"

As of early December 2009, Central Bank's foreign currency assets rose to 75.04 billion USD, up 2.3 percent from 73.34 billion USD in 2008.

Lowest level in foreign currency reserves in 2009 was 62.4 billion USD on April 24.

"Internal and external debts"

Turkey's internal debts climbed to 327.18 billion TL at the end of October 2009. This figure was 274.82 billion at the end of 2008. 10-month rise reached 19 percent.

Turkey's external debt stock dropped to 268.55 billion USD in the first half of 2009 from 278.14 billion USD at the end of 2008.

Turkey made external debt payments of 10.81 billion USD until the beginning of December 2009.
In 2008, Turkish government had repaid external debts of 15.72 billion USD.

"Course of foreign currencies"

According to figures of the Central Bank, selling price of the U.S. dollar was 1.5314 TL. It fell 1.2 percent to the level of 1.5126 on December 15, 2009. Euro increased 2.5 percent to 2.2002 TL from 2.1467 since the beginning of 2009.

In free market, U.S. dollar closed the year 2008 at 1.54 TL and on December 15, 2009 it weakened to 1.512 against Turkish lira. In contrast with U.S. dollar, Euro rose to 2.207 TL on December 15, 2009 up from 2.142 TL in 2008.

"Interest rates"

Interest rates on government debt securities were between 16 percent and 21 percent in 2008. In 2009, interest rates floated between 9 percent and 21 percent, while banks' annual deposit rates were varying between 5 percent and 9.5 percent at the end of the year. Banks were paying interest between 14 percent and 16 percent at the and of 2008.

Also, Turkish Central Bank continued to cut overnight interest rates during the whole year. In late November, the bank lowered interest rates quarter base points to 6.5 percent in overnight borrowing and to 9 percent in lending rates.

"Deposits and loans"

According to figures of the Central Bank released late November, all deposits in Turkish banks increased 9.5 percent to 449.8 billion TL from 410.6 billion TL in 2008.
Bank loans also rose 7.7 percent to 306.2 billion TL in the first 11 months of 2009. It was 284.3 billion TL at the end of 2008.

"Currency in circulation"

Turkish lira banknotes in circulation in the country was up 21.3 percent as of December 14, 2009. It climbed to 38.7 billion TL from 31.9 billion TL.

"Major economic indicators"

Below is the list of major economic indicators in 2009 in comparison with 2008:

IDNDICATORS 2008 2009 (Recent figures)
------------------------------ ----------- ---------------------
Growth rate (percent) 0.9 -8.4 (9 months)
GDP (Billion TL) 950.098 700.958 (9 months)
Inflation (producer prices) 8.11 1.51 (x)
Inflation (consumer prices) 10.06 5.53 (x)
Exchange rate of U.S. dollar 1.5314 1.5126
Imports (Billion USD) 201.963 112.849 (10 months)
Exports (Billion USD) 132.027 83.214 (10 months)
Foreign trade balance (Billion USD) -69.936 -29.635 (10 months)
Export-import coverage ratio (percent) 65.4 73.7 (10 months)
Current account balance (Billion USD) -41.416 -38.319 (10 months)
Budget revenues (Billion TL) 209.598 175.368 (10 months)
Budget expenditures (Billion TL) 227.031 218.600 (10 months)
Budget balance (Billion TL) -17.432 -43.232 (10 months)
Internal debts (Billion TL) 274.827 327.189 (10 months)
External debts (Billion USD) 278.146 268.559 (6 months)
Repaid external debts (Billion USD) 15.727 10.815 (11 months)
Central Bank reserves (Billion USD) 73.346 75.042
(x) Annual inflation rate in the last 12 months as of November 2009.



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