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24 A&T BANK ANNUAL REPORT 2015
THE CURRENT
ACCOUNT BALANCE
IMPROVES.
2015 PERFORMANCE OF TURKEY’S ECONOMY
The world’s financial markets in
2015 were mostly driven by the
monetary policies of the Fed and
other central banks, the course
of oil and commodity prices and
geopolitical developments. Emerging
market economies, including Turkey,
were adversely affected by China’s
slowing economy, concerns over
fluctuations in financial markets,
expectations for an interest rate
hike by the Fed, and the pressure
exerted by falling asset prices on the
growth rates of commodity exporter
countries. Even though the Fed
raised interest rates by 0.25 points
in December, financial markets
worldwide undoubtedly will watch
closely to see whether the Fed will
continue hiking rates gradually.
Global geopolitical developments
and the impacts of these on the
markets will also be monitored
intently.
The Turkish economy maintained
its standing as one of the fastest
growing in the G20 with a growth
rate of 3.4% through the first
three quarters of 2015 despite the
fluctuations in the global economic
environment and financial markets.
While the private sector continues to
be vibrant, the significant slowdown
in the world economy is impacting
Turkey as well.
The decline in the current account
deficit, a trend that commenced at
the beginning of the year, is ongoing
with the support of plunging oil
prices. Contraction in Turkey’s
foreign trade deficit is expected to
continue during the remainder of
the year; as a result, the current
account gap is projected to keep
narrowing. The current account
deficit is forecast to decrease from
9.7% of gross domestic product at
year-end 2011 to around 5% by the
end of 2015.
The US dollar continued to
strengthen after the Fed raised
rates in December. Meanwhile,
the indications coming from the
European Central Bank regarding
additional expansionary monetary
policy moves are increasing the
pressure on the Euro. In this
environment, the USD/TL exchange
rate soared from 2.30 at the
beginning of 2015 to 2.91 by
year-end.
Due to the slowdown in economy
and the pass-through effect of the
sharp decline in the value of the
Turkish Lira, Consumer Price Index
jumped 8.81% annually, the highest
year-end annual inflation rate in the
last four years. On the other hand,
the country’s Domestic Producer
Price Index rose just 5.71%, the
lowest year-end annual inflation
figure in the last three years.
The improvement in budget
management continued in 2015 as
the budget deficit to gross national
income ratio fell to 1.2%.
While overnight borrowing interest
rate was lowered to 7.25% in early
2015, the Central Bank of Turkey
maintained its tight fiscal policy due
to the declining Turkish Lira and
lack of improvement on the inflation
front.
The Turkish economy maintained its standing as one
of the fastest growing in the G20 countries despite
the fluctuations in the global economic environment
and financial markets.