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A&T BANK ANNUAL REPORT 2014
2014 Performance of Turkey’s Economy
Thanks to a steadfast monetary policy and
sound capital markets resilient to global financial
turbulence, Turkey managed to minimize
fluctuations in its real economy during the year.
The recent global economic slowdown, which started in
2013, showed that emerging markets including Turkey have
become more resilient to fluctuations in international capital
flows. The volatility of short-term capital flows stemming from
developments in the world’s financial markets and geopolitical
risks causes interest rates and currency exchange rates to
fluctuate. Thanks to a steadfast monetary policy and sound
capital markets resilient to global financial turbulence, Turkey
managed to minimize fluctuations in its real economy during
the year.
Turkey’s economic growth is expected to come in at 3% for
2014. As the country has maintained solid growth momentum
despite the downturn and uncertainty in global markets, and has
received an investment-grade rating from the world’s leading
credit rating agencies including Fitch, Moody’s, and Standard
and Poor’s, Turkey is expected to maintain its strong position in
the eyes of the world’s financial markets.
The current account gap continues to narrow, a trend that
started in early 2014, thanks to rising exports. As a result of the
measures taken as part of the Medium Term Program (MTP),
Turkey’s current account deficit dropped to US$ 45.8 billion by
year-end 2014, down from US$ 65 billion at year-end 2013,
which amounted to 5.7% of GDP.
Food prices, which remain high due to the increase in foreign
currency exchange rates and adverse weather conditions,
have a negative impact on inflation. The consumer price index,
which was 8.17% at end-2014, is expected to fall to 7% in 2015
with the eventual slowing of food price inflation and the sharp
decline in oil prices.
The country’s budget deficit as a percentage of national income
rose to 1.3% in 2014, up from 1.2% in 2013, and is expected to
remain at that level in 2015.
The Central Bank’s discipline and consistency in monetary
policy implementation is frequently praised by the Country’s
economic management team as well as credit rating agencies.
After the interest rate hikes in the first quarter of 2014, the
Central Bank began to reduce interest rates in the third quarter,
and it is anticipated that the current level will be maintained.