Page 27 - A&T BANK ANNUAL REPORT 2012

25 24 A&T BANK ANNUAL REPORT 2012 •
Major Developments in Turkey’s Economy
in 2012
• On the back of a growth rate of close to zero in 2008 and in
negative territory in 2009, the Turkish economy recorded
a high growth rate for two consecutive years. In 2012, it is
expected to have grown by around 3%. New policies were
also successfully implemented to manage macro risks;
the economy was cooled by controlling domestic demand,
whereas the contribution of external demand to growth
increased, thereby resulting in a healthier outlook for the
growth composition.
• Turkey’s success in closing the budget deficit and replacing
it with a current account deficit has been almost an
economic policy instrument. Throughout the past 10 years,
the current account deficit has steadily increased, while
the budget deficit was closing. The economy recorded
annual growth of approximately 9% in 2010 and 2011,
then slowing to around 3%, which has been the main
factor behind the shrinkage of the current account deficit.
Meanwhile, the ratio of the current account deficit to GDP
declined from 10% in 2011 to 6.3% in 2012.
• The most remarkable success of the past 10 years has
been the decrease in the budget deficit to an internationally
acceptable range. Indeed, following the rising trend in
the budget deficit driven by the global crisis in 2009 and
2010, it has been taken under control since 2011. In 2012,
the ratio of the budget deficit and the primary surplus to
GDP was 2.7% (TL 28.8 billion) and 1.9% (TL 19.6 billion),
respectively.
• Inflation, which has long been Turkey’s most significant
problem, capped the year of 2012 at 6.16%, thus below
the 6.5% level achieved in 2009 and 2010. Since mid-
year, monetary policy has gradually begun to be more
supportive in parallel to the increase in risk appetite. And
from the second half of 2012, the contribution of domestic
demand to the fall in inflation has become more evident.