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26
2013 Performance of Turkey’s Economy
The developments occurred during the second
half of the year directly determined the economic
performance.
The top item of the economic agenda
in 2013 was fluctuations in the
global financial markets, especially in
developing markets as a result of the
US’s decision to first slowdown then
terminate the policy of quantitative
easing through asset purchasing, which
had been in implementation for a long
time.
Outflows from bills and bonds market
and stock exchange market together
with depreciation in the Turkish lira were
observed in Turkey due to the fact that
the US Federal Reserve took the first
step to exit from quantitative easing
policy, which had been implemented
since the beginning of the global
crisis, resulting in increased risk for
Turkey. It is increasingly expected that
these conditions may cause Turkey
to become more vulnerable to global
developments for the period ahead.
Especially driven by the increase in
food prices, inflation completed the
year at 7.40%, exceeding the Mid-term
Program target. The impacts of an
approximate 20% depreciation of the
Turkish lira in 2013 are observed in both
CPI (Consumer Price Index) and PPI
(Producer Price Index). Throughout
the year, following the food prices,
transportation, which was affected by
the increase in exchange rates, has
been the second important item to put
pressure on the annual inflation rate.
During the second half of 2013,
global developments determined the
economic performance in Turkey, as in
other developing countries. While the
growth rate of GDP was 3% in the first
quarter of 2013, during the second and
third quarters it rose to 4.5% and 4.4%,
respectively. As a remarkable detail in
the composition of growth is the fact
that following the improvement in the
budget balance, public contribution
caused further increase in growth.
Based on the prediction that the
influence of fluctuation in financial
indicators on the real economy will
be limited, annual growth in 2013 is
expected to be 3.7%.
In the period ahead, increasing
privatization income and improving
cash flow in the energy sector will both
favorably affect the performance of
the budget, which displayed a positive
outlook in 2013.
As of the last quarter of 2013, it is
observed that current account deficit,
one of the most important items of
the macro economy, was financed
easily. However, portfolio investments
decreased in parallel to the capital
outflow from developing countries.
A high level of gold import, revival in
domestic demand and possible capital
outflows increases the risks about the
current account deficit whereas stable
trend in oil prices balances those risks.
The ratio of current account deficit to
GDP, which was reduced to 6.1% in
2012, is expected to increase up to
7.1% as of 2013 end.
a rising
economy