A SUMMARY NOTE ON REVISED GDP ESTIMATES 01.01.2019   A SUMMARY NOTE ON REVISED GDP ESTIMATES COVERING 1998-2007 TURKEY 1/1/2019

01.01.2019 I. INTRODUCTION   A more relevant conceptual framework that reflects contemporary requirements for measuring Turkey’s economic and financial conditions. Ensures comparability of Turkey’s statistics with other countries. Enables Turkey to meet data requirements of international organizations. 1/1/2019

II.TURKEY’S NATIONAL ACCOUNTS HISTORICAL REVISION AND FUTURE PLAN 01.01.2019 II.TURKEY’S NATIONAL ACCOUNTS HISTORICAL REVISION AND FUTURE PLAN   Comprehensive revisions of Turkish National Accounts System Base Year 1948 ( Published in 1950 ) Base Year 1968 ( Published in 1972 ) Base Year 1987 ( Published in 1993 ) Base Year 1998 ( Published in 2008 ) 1/1/2019

01.01.2019   A major undertaking of several years of intense efforts that improved measure of economic activities, understandability of accounts and harmonization with international standards Steps to inform users of major changes: Strategic Plan 2007-2011 Official Statistical Program 2007-2011 Presentation performed by Turkstat during screening process, which is part of EU accession process. Meetings with the press Discussion with major users, 1/1/2019

01.01.2019 III. OVERVIEW OF MAJOR IMPROVEMENTS TO TURKEY’S NATIONAL ACCOUNTS 1998-2007   The international guidelines for compiling national accounts and GDP. European System of Accounts 1995 replaced the 1968 SNA Current situation in Turkey vis-à-vis the guidelines Turkstat was compiling GDP on the basis on the 1968 SNA Turkstat has a two-phase program for implementing the ESA 95 First, implementation in March of 2008 Second phase is elaborated in Turkstat’s Strategic Plan 2007-2011 Historical revisions come from three types of improvements Definitions, classifications, and other methodological improvements Improvements to source data Improvements to statistical techniques 1/1/2019

IV. MAJOR IMPROVEMENTS TO TURKEY’S NATIONAL ACCOUNTS 01.01.2019 IV. MAJOR IMPROVEMENTS TO TURKEY’S NATIONAL ACCOUNTS   The 2002 Census of Industry and Business Establishments Better coverage of production of goods and services, particularly for manufacturing industries, updated business register leading to improved results from future sample surveys. The Labor Force Survey (LFS) Improved LFS sample size increases accuracy, content is expanded. Results in improvements to the adjustments for the Non-Observed Economy (better exhaustiveness) The 2000 Building Census and the Number of Electricity Subscribers. Improved data on the number of dwellings which is used in the estimates of paid and imputed rents by type of dwelling and heating system. The 2001 Farm Census Updates and improves technical coefficients utilized for estimation of the sector’s value added 1/1/2019

Improvements to the commodity flow system 01.01.2019 Improvements to the commodity flow system Improves the identification of goods used in intermediate consumption, investment, and household consumption Improves the indirect estimates of selected components of final demand (GDP by expenditure) and selected adjustments to production (e.g., construction). Improved Supply and Use tables for 2002, basis for benchmark year The 2002 Supply-Use and Input-Output Tables is the first table compiled by the concepts, definitions and classifications of the 1995 European System of Accounts (ESA’95). Financial Services measured according to ESA 95 Measurement of the “Financial Intermediation Services Indirectly Measured” (FISIM) according to ESA 95 A portion of FISIM is allocated to final consumption (final demand), which would increase GDP by the portion of FISIM that is used in final demand A portion of FISIM is allocated to intermediate consumption in GDP by production approach. Central Bank output is measured as sum of costs.   1/1/2019

Introduction of a revised base year (1998) 01.01.2019 Introduction of a revised base year (1998) Improves the accuracy of constant price GDP Adoption of chain-linking method in constant price estimation Gives more accurate aggregate volume growth rate Adoption of Unit value indices at constant price estimation of exports/imports of goods. Measurement at basic prices (GDP by Production Approach) The VAT (and other taxes and subsidies on products) are now shown as a separate component of GDP No net impact on GDP, but better measurement of value added   1/1/2019

01.01.2019 Classification systems based on ESA 95 and other international standards New classification of industries (NACE Rev. 1) and private household consumption (COICOP) will facilitate international comparison Reclassification of some components of GDP by industries (such as government production, which is now allocated to public administration, health, and education) Free Trade Zones is included in economic territory of country Government Final Consumption is split up two categories. Individual Final Consumption Expenditure of Government Collective Final Consumption Expenditure of Government Final Consumption Expenditure of Households is divided into four groups Final consumption expenditure of resident and non-resident households on the economic territory Final consumption expenditure of resident households in abroad. Final consumption expenditure of non-resident households on the economic territory. Final consumption expenditure of resident households.   1/1/2019