1. MINISTRY of ECONOMY ECONOMIC OUTLOOK The Embassy of the Republic of Turkey, Office of the Commercial Counsellor May 2012 Recent Update:04/12/2012

2. A- MACROECONOMIC OUTLOOK B- FOREIGN TRADE OUTLOOK 1) MERCHANDISE 2) SERVICES C- TURKEY-EU TRADE D- INVESTMENT E- WHY TURKEY? OUTLINE April 2012 Ministry of Economy 2

3. A- MACROECONOMIC OUTLOOK April 2012 Ministry of Economy 3

4. TURKEY ON THE CROSSROADS OF CONTINENTS April 2012 Ministry of Economy 4 Geographical Area: 783.562 km2 Population : 73,7 Million GDP (2011): 772,3 Billion US $ GDP per capita (2011) : 10.444 US $ GDP Growth Rate (2011): 8,5% Inflation Rate (2011) : 10,45% Trade Volume (2011) : 375.807 Billion US $

5. Real GDP Growth of Selected Countries/Country Groups (2011)  Turkish Economy expanded by 8.5% in 2011, which was well beyond the expectations of the IMF (7.5%). Source: TURKSTAT, IMF and countries’ statistics offices * Data for India is IMF estimate. April 2012 Ministry of Economy 5 Japan

6. Growth Forecasts for Selected Countries/Country Groups (%) Source: IMF, OECD, UN, WB April 2012 Ministry of Economy 6

7. Economic Targets of 2012-2014 Medium Term Programme *Forecast (Medium Term Programme, Ministry of Development – October 13, 2011)  Medium Term Programme aims to sustain economic growth, to decrease the current account deficit, and to preserve macroeconomic and financial stability. April 2012 Ministry of Economy 7

8. GDP Per Capita Source: Dollar value is from TURKSTAT, PPP Dollar value is from World Bank  GDP per capita has tripled in the last ten years from 3,492 USD to 10,444 USD. According to Purchasing Power Parity (PPP),GDP per capita surpassed 15 thousand USD. April 2012 Ministry of Economy 8

9. Turkish Economy GDP* and Inflation Rates (2001-2011)

10. CDS Premiums (10 April 2012) Higher CDS premiums indicate higher risk levels. PIIGS: Portugal, Irland, Italy, Greece, Spain  CDS premium of Turkey is significantly low compared to most of the European countries. April 2012 Ministry of Economy 10

11. Budget Deficit/ GDP (%)  22 EU countries couldn’t satisfy the Maastricht criteria (3%) in 2010.  Central government budget deficit/GDP ratio was 1.3% in Turkey in 2011.  In January-February 2012, central government budget had a 900 million dollars deficit. * 2011 March 2012 Ministry of Economy 11

12. Government Debt / GDP (%)  Debt/GDP ratio of Turkey was 39.4% in 2011, which was below the level in 18 EU Countries and the Maastricht Criteria (60%). April 2012 Ministry of Economy 12

13. Unemployment Rates (%)  Unemployment rates have returned to the pre-crisis level.  In 2011, the annual rate of unemployment ocurred 2.1 points less than a year earlier and recorded as 9.8%.  Unemployment rate in the Euro Zone and was 10.8% in February 2012.  Turkey has the 5th largest labor force among the European countries. (2009, World Bank) Source: TURKSTAT April 2012 Ministry of Economy 13

14. Potential of Population (2010) Source: World Bank  Turkey has a population of 74.7 million in which half of the population is under the age of 29.2.  Growth rate of population is 1.36% in Turkey, 0.28% in EU Countries and -0.2% in Germany. 14 April 2012 Ministry of Economy

15. B- FOREIGN TRADE OUTLOOK April 2012 Ministry of Economy 15

16. I) MERCHANDISE April 2012 Ministry of Economy 16

17. 17 Foreign Trade Volume/GDP (%)  The ratio of foreign trade volume/GDP was 48,7% in 2011.  Turkey’s integration to the international trade system is eminent. APRIL 2012 Ministry of Economy

18. Turkey’s Foreign Trade (2002-2011, Billion US Dolars)  Turkey’s share in global merchandise exports was %0.74 in 2011. April 2012 Ministry of Economy 18

19. Targets in Merchandise Trade * 2008-2011, Actual (Source: TURKSTAT) **Forecast: 2012-2014, Medium Term Programme, Ministry of Development- 13/10/2011) April 2012 Ministry of Economy 19

20. Distribution of Foreign Trade in Broad Economic Categories EXPORT 20 IMPORT April 2012 Ministry of Economy

21. Main Export Items Source: TURKSTAT 21 * Percent change is related to the annual change in exports in 2012. April 2012 Ministry of Economy

22. Main Import Items Source: TURKSTAT 22 * Percent change is related to the annual change in imports in 2012. April 2012 Ministry of Economy

23. Main Export Partners (Share,%) Main Trade Partners (January-February 2012) Main Import Partners (Share,%) Source: TURKSTAT April 2012 Ministry of Economy 32

24. Exports by Regions Source: TURKSTAT April 2012 Ministry of Economy 33

25. Imports by Regions Source: TURKSTAT April 2012 Ministry of Economy 34

26. Tariff Rates Source: WTO Tariff Profiles, 2010 April 2012 Ministry of Economy 35

27. 2) SERVICES April 2012 Ministry of Economy 36

28. Tourism Statistics (Quarterly) April 2012 Ministry of Economy 28 Tourists visited, Source: TURKSTAT  Turkey’s income per tourist increased by 18% in 2010 and 10,6% in 2011.

29. Constructing Services Abroad 29  31 out of the world’s top 225 constructing companies are Turkish.  Turkey ranks as the 2nd country (following China) in terms of the number of top constructing companies. April 2012 Ministry of Economy

30. Logistics 30  Europe’s biggest truck fleet  (45 thousands trucks and 1,420 companies)  Almost 1 million flights in 2011  (2.3 million tonnes freight and 117 million passengers)  25. biggest fleet in the world  45 airports and 51 ports  Total length of divided highways will reach 15 thousand kilometers.  High-speed railway projects are carried out rapidly. April 2012 Ministry of Economy

31. C- INVESTMENTS 31 April 2012 Ministry of Economy

32. Foreign Direct Investment Inflows (Billion US Dolars) 32 April 2012 Ministry of Economy

33. Time Required to Start a Business  The required time to start a business is 6 days in Turkey. Source: Invest In Turkey 33 April 2012 Ministry of Economy

34. Skilled Labour Availability  Scoring is between 0 and 10. Source: Invest In Turkey 34 April 2012 Ministry of Economy

35. Transparency in Finance Sector Source: Invest In Turkey April 2012 Ministry of Economy 35  Scoring is between 0 and 10.

36. The Sectoral Breakdown of Foreign Investments Source: CBRT * January - February April 2012 Ministry of Economy 36

37. 37 D – EU-TURKEY TRADE RELATIONS

38. Chronological Evolution of Turkey and EU Relations  1963: Association Agreement was signed  1996: Customs Union was established  3 October 2005 : Accession Negotiations were started  20 October 2005 : Screening Process was started  October 2006 : Screening Process for 33 Chapters was concluded.  Currently Negotiations in one chapter (Science and Research) is provisionally closed, and negotiations for 12 Chapters are ongoing.  (“Enterprise and Industrial Policy”, “Financial Control”, “Statistics”, “Consumer and Health Protection”, “Trans-European Networks”, “Company Law”, “Intellectual Property Law”, “Free Movement of Capital”, “Information Society and Media”, “Environment”, “Food, Veterinary, and Phytosanitary Policy”, “Taxation”) April 2012 Ministry of Economy 38

39. Trade between Turkey and the EU Source: Data Source of the Ministry of Economy April 2012 Ministry of Economy 39

40. Share of the EU in Turkey’s Foreign Trade

41. 1.EFTA (Norway, Switzerland, Iceland, Liechtenstein) 2.Israel 3.Macedonia 4.Croatia 5.Bosnia and Herzegovina 6.Palestine 7.Tunisia 8.Morocco 9.Syria FTA (Free Trade Agreement) Countries 10.Egypt 11.Albania 12.Georgia 13.Montenegro 14.Serbia 15.Chile 16.Jordan 17.Lebanon* 18.Mauritius* (*) Agreements that are in the approval process April 2012 Ministry of Economy 41

42.  Our exports to FTA Countries increased %7,2 in 2011.  The share of FTA Countries in total exports reached 10%.  Turkey recorded a trade surplus of 1,4 billion USD in 2011 with FTA Countries, while there was a trade deficit of 1.5 billion USD in 2002. Trade with FTA Countries April 2012 Ministry of Economy 42

43. 43 E – WHY TO INVEST IN TURKEY ?

44. Investment Climate in Turkey 44 April 2012 Ministry of Economy

45. 45 THANK YOU! The Embassy of the Republic of Turkey, Office of The Commercial Counsellor 36-1 3444998 Tel: + 36-1 3444998 36-1- 344 5896 Fax: + 36-1- 344 5896 budapeste@ekonomi.gov.tr E-mail: budapeste@ekonomi.gov.tr www.tcp.gov.tr Web adress: www.tcp.gov.tr