ECONOMIC OUTLOOK

MINISTRY of ECONOMYMINISTRY of ECONOMY

ECONOMIC OUTLOOK

FEBRUARY 2014FEBRUARY 2014

Economic Outlook is revized in the 1st and the 3rd weeks of the month.

Recent Update: 02/21/2014

A- MACROECONOMIC OUTLOOKA- MACROECONOMIC OUTLOOK

B- FOREIGN TRADE OUTLOOKB- FOREIGN TRADE OUTLOOK

1) MERCHANDISE1) MERCHANDISE

2) SERVICES2) SERVICES

C- INVESTMENTS , FOREIGN CAPITAL and INCENTIVESC- INVESTMENTS , FOREIGN CAPITAL and INCENTIVES

D- FREE ZONES in TURKEYD- FREE ZONES in TURKEY

E- BILATERAL, REGIONAL, PLURILATERAL and MULTILATERAL TRADEE- BILATERAL, REGIONAL, PLURILATERAL and MULTILATERAL TRADE

OUTLINEOUTLINE

February 2014 Ministry of EconomyFebruary 2014 Ministry of Economy 22

A- MACROECONOMIC OUTLOOKA- MACROECONOMIC OUTLOOK


Growth Forecasts for Selected Countries/Country Groups (%)Growth Forecasts for Selected Countries/Country Groups (%)

In 2012, Turkish economy grew by 2.2%. According to the IMF, Turkish Economy is expected to grow by 3.8% in

2013. In the third quarter of 2013, Turkish Economy grew by 4.4%. Turkish

economy expanded by 4.0% in the first three quarters of 2013.

Source: IMF, OECD, WB


Turkey Euro Area US Brazil Russia India China2013 3.8 -0.4 1.9 2.3 1.5 4.4 7.72014 3.5 1.0 2.8 2.3 2.0 5.4 7.52015 4.3 1.4 3.0 2.8 2.5 6.4 7.32013 3.6 -0.4 1.7 2.5 1.5 3.0 7.72014 3.8 1.0 2.9 2.2 2.3 4.7 8.22015 4.1 1.6 3.4 2.5 2.9 5.7 7.52013 4.3 -0.4 1.8 2.2 1.3 4.8 7.72014 3.5 1.1 2.8 2.4 2.2 6.2 7.72015 3.9 1.4 2.9 2.7 2.7 6.6 7.5

IMF

OECD

WB

Growth Forecasts for Selected Countries/Country Groups (%)

According to the IMF estimates, global trade volume of merchandise and services is expected to increase by 2.7% in 2013 and 4.5% in 2014.

According to the WTO estimates, global trade volume of merchandise and services is expected to increase by 2.5% in 2013 and 4.5% in 2014.

Forecasts for Merchandise and Services Trade Growth (%)Forecasts for Merchandise and Services Trade Growth (%)

Source: IMF and WTO


YearsAdvanced Economies

Emerging Markets

Advanced Economies

Emerging Markets

2013 2.7 3.5 1.4 5.3 2.72014 4.7 5.8 3.4 5.9 4.52013 1.5 3.6 -0.1 5.8 2.52014 2.8 6.3 3.2 6.2 4.5WTO

Forecasts for Merchandise and Services Trade Growth (%)Exports Imports World

Trade Volume

IMF

Economic Targets of 201Economic Targets of 20144-201-20166 Medium Term Program Medium Term Program

*Actual** Forecast (Medium Term Program, Ministry of Development – October 8, 2013)

Medium Term Program which covers 2014-2016 period aims to reduce the current account deficit gradually and increase the growth rate by minimizing the effects of global uncertainty.


2012* 2013** 2014 2015 2016GDP (Billion $, Current Prices) 786 823 867 928 996GDP Per Capita ($) 10497 10,818 11,277 11,927 12,670Real GDP Growth 2.2 3.6 4.0 5.0 5.0Unemployment Rate (%) 9.2 9.5 9.4 9.2 8.9Tourism Income (Billion $) 25.7 29.0 31.0 32.0 34.5Current Account Balance (Billion $) -47.8 -58.8 -55.5 -55.0 -55.0Current Account Balance / GDP (%) -6.1 -7.1 -6.4 -5.9 -5.5

Real GDP Growth of Selected Countries/Country Groups (2012)Real GDP Growth of Selected Countries/Country Groups (2012)

Turkish Economy expanded by 2.2% in 2012.Turkish Economy grew by 3.0%, 4.5% and 4.4% in the first three quarters of 2013, respectively.

Source: TURKSTAT, IMF, Eurostat* 2013


Annual Economic Growth Rates (2002-2012)Annual Economic Growth Rates (2002-2012)

* Forecast, Medium Term Programme Source:TURKSTAT

Turkey has recovered fast from the global financial crisis. It is among the least affected countries from current global economic uncertainties.

Mean annual growth rate between 2002 and 2012 was 5.2%. Real GDP growth for 2012 realized as 2.2%.


GDP Per CapitaGDP Per Capita

Source: Dollar value is from TURKSTAT, PPP GNI value from World Bank

Since 2002 GDP per capita has tripled from 3,492 USD to 10,497 USD. According to Purchasing Power Parity (PPP) GNI per capita surpassed 18 thousand USD.


Capacity Utilization Ratio (%)Capacity Utilization Ratio (%)

Source: TURKSTAT

Capacity utilization ratio realized as 73.9% in January 2014.


Industrial Production IndexIndustrial Production Index

Source: TURKSTAT

Industrial production index increased by 6.93% year-over-year to 124.81 (2010=100) in December 2013.


Inflation (Annual Percent Change)Inflation (Annual Percent Change)

Annual inflation in 2013 was realized as 7.40% and 6.97% according to CPI and PPI, respectively.

Source: TURKSTAT


Real Effective Foreign Exchange Rate (2003=100)Real Effective Foreign Exchange Rate (2003=100)

Compared to the previous month, as of January 2014, Turkish Lira has depreciated by 5.01% in terms of the CPI-based real effective exchange rate and depreciated by 4.01% in terms of the PPI- based real effective exchange rate.

Source: CBRT

FebruFebruary 2014 Ministry of Economyary 2014 Ministry of Economy 1313

Total Credits and Consumer Credits (Billion TL)Total Credits and Consumer Credits (Billion TL)

Credits and specifically consumer credits increased in parallel to the growing domestic demand.

Total credits increased 3.71% on a monthly basis in December 2013.

FebruaryFebruary 2014 Ministry of Economy 2014 Ministry of Economy 1414

Source: BRSA

CDS Premiums (Feb 19th, 2014)CDS Premiums (Feb 19th, 2014)

Source: DB Research* Higher CDS premiums indicate higher risk levels.

CDS premium of Turkey indicates a medium level of risk.


Financial MarketsFinancial Markets

Comparing to previous year, total assets of the banking sector increased by 26.3% and reached 1,732 trillion TL in December 2013.

Capital Adequacy Ratio of Turkish Banking Sector is 15.3% in December 2013.

FebruaryFebruary 2014 Ministry of Economy 2014 Ministry of Economy 1616

Source: BRSA

Data on Banking Sector 2012 December 2013 December

Number of Banks 49 49

Number of Domestic Branches 10,981 11,903

Number of Foreign Branches 80 83

Number of Total Domestic Personnel Employed 213,466 200,745

Total Assets (Million TL) 1,370,690 1,732,412

Total Equities (Million TL) 181,940 193,818

Net Profit or Loss (Million TL) 23,523 24,759

Nonperforming Loans (Gross) / Cash and Cash Equivalents (%) 2.86 2.74

Net Profit or Loss / Average Equities (%) 15.68 14.25

Liquid Assets with 12 Months of Maturity / Total Assets (%) 70.53 75.16

Capital Adequacy Ratio (%) 17.86 15.3

EU Defined Budget Deficit/ GDP (%)EU Defined Budget Deficit/ GDP (%)

EU defined general government budget deficit/GDP ratio was 2.6% in Turkey in 2010 and Turkey satisfied the Maastricht criteria of 3%. Turkey also outperformed 22 EU Countries.

Central government budget deficit/GDP ratio was 2.0% in Turkey in 2012. In 2013, central government budget deficit was 18,4 billion TL. In January

2014, central government budget surplus was 1,9 billion TL compared to 5,9 billion TL in the same period of 2013.


Source: Eurostat* 2010

Government Debt / GDP (%)Government Debt / GDP (%)

Debt/GDP ratio of Turkey was 36.2% in 2012, which was below the level in 25 EU Countries and the Maastricht Criteria (60%).


Source: Eurostat

Unemployment Rates (%)Unemployment Rates (%)

In November 2013, both the unemployment rate and Seasonally adjusted unemployment rate was 9.9%.

Seasonally adjusted unemployment rate in Euro Area was 12.0% and 10.7% in (EU28) in December 2013. In terms of unemployment ratio Turkey outperformed 14 EU countries according to current data.

After Russia, Germany, England and France, Turkey has the 5th largest labor force among the European countries. (2012, World Bank)

Source: TURKSTAT


Potential of Population (2012)Potential of Population (2012)

Source: World Bank and TURKSTAT (Turkey’s data are for 2013) Turkey has a population of 76.4 million in which half of the population

is under the age of 30.4. Growth rate of population is 1.4% in Turkey, 0.2% in EU Countries and

0.1% in Germany.

2020February 2014 Ministry of EconomyFebruary 2014 Ministry of Economy

Cell phone penetration rate in households: 93.7% (2013)

Internet access rate in households: 49.1% (2013) Internet access rate in enterprises: 90.8% (2013) PC penetration rate in households: 30.5% (2013) Laptop penetration rate in households: 31.4% (2013) Digital camera penetration rate in households: 28.1%

(2013) Printer penetration rate in households: 14.0% (2011)

Growing Dynamism in Turkey's Domestic MarketGrowing Dynamism in Turkey's Domestic Market


B- FOREIGN TRADE OUTLOOKB- FOREIGN TRADE OUTLOOK


I) MERCHANDISEI) MERCHANDISE


Targets in Merchandise TradeTargets in Merchandise Trade

* Actual (Source: TURKSTAT)**Forecast: Medium Term Programme, Ministry of Development, 2014-2016)***The Exports Strategy of Turkey For 2023


(Billion $) 2012* 2013* 2013** 2014** 2015** 2016** 2023***Exports 152.5 151.9 153.5 166.5 184 202.5 500Imports 236.5 251.7 251.5 262 282 305 625Volume of trade 389 403.5 405 428.5 466 507.5 1125Balance of trade -84.1 -99.8 -98 -95.5 -98 -102.5 -125Exports/Imports (%) 64.5 60.3 61.0 63.5 65.2 66.4 80.0

Turkey's Share in Global Merchandise Exports (%)Turkey's Share in Global Merchandise Exports (%)

Turkey’s share in global merchandise exports was %0.83 in 2012.


2626

Foreign Trade Volume/GDP (%)Foreign Trade Volume/GDP (%)

The ratio of foreign trade volume to GDP was 49.5% in 2012. Turkey’s integration to the international trade system is eminent.

February 2014 Ministry of EconomyFebruary 2014 Ministry of Economy

Foreign Trade Developments Foreign Trade Developments

In January-December period of 2013 compared to same period of 2012, exports decreased by 0.4% and imports increased by 6.4% respectively.

Source: Ministry of Economy


2011 - 2012 / January-December 2012 - 20132011 - 2012 / January-December 2012 - 2013

* Energy corresponds to Chapter 27.

2011 2012 2012 / (JAN - DEC) 2013 / (JAN - DEC)Change (%) 2012/2013

Export 134.9 152.5 152.5 151.9 -0.4Energy Export 6.5 7.7 7.7 6.7 -12.9Gold Export 1.5 13.3 13.3 3.3 -74.9

Import 240.8 236.5 236.5 251.7 6.4Energy Import 54.1 60.1 60.1 55.9 -7.0Gold Import 6.1 7.6 7.6 15.1 98.2

Foreign Trade Volume 375.7 389.0 389.0 403.5 3.7Foreign Trade Balance -105.9 -84.1 -84.1 -99.8 18.7Balance excl. Energy -58.4 -31.7 -31.7 -50.6 59.7Export/Import (%) 56.0 64.5 64.5 60.4 *

Annual (Billion $) Periodic (Billion Dollar)

Monthly Exports/Imports Monthly Exports/Imports


In December 2013 compared to same period of 2012, exports have increased by 4.8% and realized as 13.2 billion dollar and imports have increased by 16.7% up to the level of 23.1 billion dollar.

Distribution of Foreign Trade in Broad Economic Categories Distribution of Foreign Trade in Broad Economic Categories

EXPORT

2929

IMPORT


2011/2012 2012/20132011 2012 Değ.% 2012 2013 Change %

Investment Goods 14,192 13,734 -3.2 13,734 15,601 10.3 13.6Intermediate Goods 67,942 82,656 21.7 82,656 74,843 49.3 -9.5Consumption Goods 52,219 55,556 6.4 55.56 60,764 40.0 9.4Others 555 516 -7.0 516 662 0.4 28.2TOTAL 134,907 152,462 13.0 96,906 151,870 100.0 -0.4

(Million $)Annual Periodic (January-Dec) Jan-Dec %

Share

2011/2012 2012/20132011 2012 Değ.% 2012 2013 Change %

Investment Goods 37,271 33,925 -9.0 33,925 36,760 14.6 8.4Intermediate Goods 173,140 174,930 1.0 174,930 183,812 73.0 5.1Consumption Goods 29,692 26,699 -10.1 26,699 30,416 12.1 13.9Others 739 990 34.0 990 663 0.3 -33.1TOTAL 240,842 236,545 -1.8 236,544 251,651 100.0 6.4

(Million $)Annual Periodic (January-Dec) Jan-Dec %

Share

Main Export Items Main Export Items

Source: TURKSTAT

3030

* Percent change is related to the annual change in exports in 2013.


CHANGE % 2012 2013 2012 2013 2012 2013 2012/2013

1 87VEHICLES OTHER THAN RAILWAY OR TRAMWAY ROLLING-ST OCK, AND PARTS AND ACCESSORIES THEREOF

15,148 17,004 14,514 16,808 634 196 12.3

2 84 NUCLEAR REACTORS, BOILERS, MACHINERY AND MECHANIC AL APPLIANCES; PARTS THEREOF 11,999 12,998 26,316 30,159 -14,317 -17,162 8.33 72 IRON AND STEEL 11,332 9,934 19,642 18,691 -8,310 -8,757 -12.3

4 85

ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS THER EOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PA RTS AND ACCESSORIES OF SUCH ARTICLES

9,373 9,551 16,280 17,759 -6,907 -8,207 1.9

5 61 ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, KNI TTED OR CROCHETED 8,419 9,257 843 941 7,575 8,315 10.0

6 71NATURAL OR CULTURED PEARLS, PRECIOUS OR SEMI-PREC IOUS STONES, PRECIOUS METALS, METALS CLAD WITH PR ECIOUS METAL, AND ARTICLES THEREOF; IMITATION JEW ELLERY; COIN

16,325 6,979 8,529 16,226 7,796 -9,247 -57.3

7 27MINERAL FUELS, MINERAL OILS AND PRODUCTS OF THEIR DISTILLATION;BITUMINOUS SUBSTANCES; MINERAL WAXE S

7,708 6,713 60,117 55,915 -52,409 -49,202 -12.9

8 73 ARTICLES OF IRON OR STEEL 6,093 6,160 2,367 2,758 3,726 3,402 1.19 62 ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, NOT KNITTED OR CROCHETED 5,431 5,717 1,498 1,863 3,933 3,854 5.310 39 PLASTICS AND ARTICLES THEREOF 5,013 5,611 12,505 13,881 -7,492 -8,270 11.9

96,842 89,924 162,612 175,001 -65,770 -85,077 -7.1152,462 151,869 236,545 251,651 -84,083 -99,782 -0.4

Periodic (January-December) Million Dolar

Rank Code Description of ChapterEXPORT IMPORT BALANCE

LIST TOTALTOTAL

Main Import Items Main Import Items

Source: TURKSTAT

3131

* Percent change is related to the annual change in exports in 2013.


CHANGE %2012 2013 2012 2013 2012 2013 2012/2013

127

MINERAL FUELS, MINERAL OILS AND PRODUCTS OF THEIR DISTILLATION;BITUMINOUS SUBSTANCES; MINERAL WAXE S 60,117 55,915 7,708 6,713 -52,409 -49,202

-7.0

2 84 NUCLEAR REACTORS, BOILERS, MACHINERY AND MECHANIC AL APPLIANCES; PARTS THEREOF 26,316 30,159 11,999 12,998 -14,317 -17,162 14.63 72 IRON AND STEEL 19,642 18,691 11,332 9,934 -8,310 -8,757 -4.8

485

ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS THER EOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PA RTS AND ACCESSORIES OF SUCH ARTICLES 16,280 17,759 9,373 9,551 -6,907 -8,207

9.1

587

VEHICLES OTHER THAN RAILWAY OR TRAMWAY ROLLING-ST OCK, AND PARTS AND ACCESSORIES THEREOF 14,514 16,808 15,148 17,004 634 196

15.8

671

NATURAL OR CULTURED PEARLS, PRECIOUS OR SEMI-PREC IOUS STONES, PRECIOUS METALS, METALS CLAD WITH PR ECIOUS METAL, AND ARTICLES THEREOF; IMITATION JEW ELLERY; COIN 8,529 16,226 16,325 6,979 7,796 -9,247

90.2

7 39 PLASTICS AND ARTICLES THEREOF 12,505 13,881 5,013 5,611 -7,492 -8,270 11.08 29 ORGANIC CHEMICALS 5,065 5,314 647 599 -4,418 -4,716 4.9

990

OPTICAL, PHOTOGRAPHIC, CINEMATOGRAPHIC, MEASURING , CHECKING, PRECISION, MEDICAL OR SURGICAL INSTRU MENTS AND APPARATUS; PARTS AND ACCESSORIES THEREO F 4,056 4,558 555 662 -3,501 -3,896

12.4

10 30 PHARMACEUTICAL PRODUCTS 3,996 4,151 662 755 -3,334 -3,396 3.9171,020 183,462 78,763 70,805 -92,257 -112,657 7.3236,545 251,651 152,462 151,869 -84,083 -99,782 6.4

Periodic (January-December) Million Dollar

Rank Code Description of ChapterIMPORT EXPORT BALANCE

LIST TOTAL TOTAL

Main Export Items (Annual) Main Export Items (Annual)

Source: TURKSTAT


CHANGE % 2012 2013 2012 2013 2012 2013 2012/2013

1 87VEHICLES OTHER THAN RAILWAY OR TRAMWAY ROLLING-ST OCK, AND PARTS AND ACCESSORIES THEREOF

15,148 17,004 14,514 16,808 634 196 12.3

2 84NUCLEAR REACTORS, BOILERS, MACHINERY AND MECHANIC AL APPLIANCES; PARTS THEREOF

11,999 12,998 26,316 30,159 -14,317 -17,162 8.3

3 72 IRON AND STEEL 11,332 9,934 19,642 18,691 -8,310 -8,757 -12.3

4 85

ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS THER EOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PA RTS AND ACCESSORIES OF SUCH ARTICLES

9,373 9,551 16,280 17,759 -6,907 -8,207 1.9

5 61 ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, KNI TTED OR CROCHETED 8,419 9,257 843 941 7,575 8,315 10.0

6 71

NATURAL OR CULTURED PEARLS, PRECIOUS OR SEMI-PREC IOUS STONES, PRECIOUS METALS, METALS CLAD WITH PR ECIOUS METAL, AND ARTICLES THEREOF; IMITATION JEW ELLERY; COIN

16,325 6,979 8,529 16,226 7,796 -9,247 -57.3

7 27MINERAL FUELS, MINERAL OILS AND PRODUCTS OF THEIR DISTILLATION;BITUMINOUS SUBSTANCES; MINERAL WAXE S

7,708 6,713 60,117 55,915 -52,409 -49,202 -12.9

8 73 ARTICLES OF IRON OR STEEL 6,093 6,160 2,367 2,758 3,726 3,402 1.1

9 62ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, NOT KNITTED OR CROCHETED

5,431 5,717 1,498 1,863 3,933 3,854 5.3

10 39 PLASTICS AND ARTICLES THEREOF 5,013 5,611 12,505 13,881 -7,492 -8,270 11.996,842 89,924 162,612 175,001 -65,770 -85,077 -7.1

152,462 151,869 236,545 251,651 -84,083 -99,782 -0.4LIST TOTAL

TOTAL

Annual (Million Dolar)

Rank Code Description of ChapterEXPORT IMPORT BALANCE

Main Import Items (Annual) Main Import Items (Annual)

Source: TURKSTAT


CHANGE %2012 2013 2012 2013 2012 2013 2012/2013

1 27MINERAL FUELS, MINERAL OILS AND PRODUCTS OF THEIR DISTILLATION;BITUMINOUS SUBSTANCES; MINERAL WAXE S 60,117 55,915 7,708 6,713 -52,409 -49,202

-7.0

2 84NUCLEAR REACTORS, BOILERS, MACHINERY AND MECHANIC AL APPLIANCES; PARTS THEREOF 26,316 30,159 11,999 12,998 -14,317 -17,162

14.6

3 72 IRON AND STEEL 19,642 18,691 11,332 9,934 -8,310 -8,757 -4.8

4 85

ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS THER EOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PA RTS AND ACCESSORIES OF SUCH ARTICLES 16,280 17,759 9,373 9,551 -6,907 -8,207

9.1

5 87VEHICLES OTHER THAN RAILWAY OR TRAMWAY ROLLING-ST OCK, AND PARTS AND ACCESSORIES THEREOF 14,514 16,808 15,148 17,004 634 196

15.8

6 71

NATURAL OR CULTURED PEARLS, PRECIOUS OR SEMI-PREC IOUS STONES, PRECIOUS METALS, METALS CLAD WITH PR ECIOUS METAL, AND ARTICLES THEREOF; IMITATION JEW ELLERY; COIN 8,529 16,226 16,325 6,979 7,796 -9,247

90.2

7 39 PLASTICS AND ARTICLES THEREOF 12,505 13,881 5,013 5,611 -7,492 -8,270 11.08 29 ORGANIC CHEMICALS 5,065 5,314 647 599 -4,418 -4,716 4.9

9 90

OPTICAL, PHOTOGRAPHIC, CINEMATOGRAPHIC, MEASURING , CHECKING, PRECISION, MEDICAL OR SURGICAL INSTRU MENTS AND APPARATUS; PARTS AND ACCESSORIES THEREO F 4,056 4,558 555 662 -3,501 -3,896

12.4

10 30 PHARMACEUTICAL PRODUCTS 3,996 4,151 662 755 -3,334 -3,396 3.9171,020 183,462 78,763 70,805 -92,257 -112,657 7.3236,545 251,651 152,462 151,869 -84,083 -99,782 6.4TOTAL

Description of ChapterRank Code

Annual (Million Dollar)IMPORT EXPORT BALANCE

LIST TOTAL

Source: TURKSTAT

Main Export Partners (Share,%)

Main Trade Partners (JanuaryMain Trade Partners (January-December -December 20120133))

Main Import Partners (Share,%)

Source: TURKSTAT


Exports by RegionsExports by Regions

Source: TURKSTAT


2012 Share (%) 2013 Share (%) Change(%) 2012 Share (%) 2013 Share (%) Change(%) A- EU (28) 4,953 39.3 5,279 39.9 6.6 59,398 39.0 63,055 41.5 6.2 B- FREE ZONES IN TURKEY 180 1.4 206 1.6 14.6 2,295 1.5 2,413 1.6 5.1 C- OTHER COUNTRIES 7,473 59.3 7,735 58.5 3.5 90,768 59.5 86,400 56.9 -4.8 1- OTHER EUROPE 1,174 9.3 1,155 8.7 -1.6 14,167 9.3 14,227 9.4 0.4 2- AFRICA 1,225 9.7 1,319 10.0 7.7 13,357 8.8 14,159 9.3 6.0 North Africa 861 6.8 921 7.0 7.0 9,444 6.2 10,047 6.6 6.4 Other Africa 364 2.9 398 3.0 9.3 3,913 2.6 4,111 2.7 5.1 3- AMERICA 888 7.0 859 6.5 -3.3 9,623 6.3 9,696 6.4 0.8 North America 600 4.8 578 4.4 -3.6 6,663 4.4 6,564 4.3 -1.5 Central America And Caraips 65 0.5 64 0.5 -2.2 770 0.5 1,004 0.7 30.5 South America 223 1.8 217 1.6 -2.5 2,191 1.4 2,129 1.4 -2.9 4- ASIA 4,133 32.8 4,321 32.7 4.6 53,026 34.8 47,631 31.4 -10.2 Near And Middle Eastern 3,138 24.9 3,205 24.2 2.1 42,451 27.8 35,597 23.4 -16.1 Other Asia 995 7.9 1,116 8.4 12.2 10,575 6.9 12,033 7.9 13.8 5- AUSTRALIA AND NEW ZEALAND 48 0.4 52 0.4 7.7 490 0.3 539 0.4 9.8 6- OTHER COUNTRIES AND REGIONS 5 0.0 28 0.2 468.0 105 0.1 149 0.1 41.7

TOTAL 12,605 100 13,220 100 4.9 152,462 100 151,869 100 -0.4

(Million $)December January-December

ImportImports by Regionss by Regions

Source: TURKSTAT


2012 Share (%) 2013 Share (%) Change(%) 2012 Share (%) 2013 Share (%) Change(%) A- EU (28) 7,666 38.7 8,725 37.7 13.8 87,657 37.1 92,447 36.7 5.5 B- FREE ZONES IN TURKEY 89 0.4 119 0.5 33.8 1,046 0.4 1,268 0.5 21.2 C- OTHER COUNTRIES 12,072 60.9 14,293 61.8 18.4 147,842 62.5 157,936 62.8 6.8 1- OTHER EUROPE 3,149 15.9 3,971 17.2 26.1 37,206 15.7 41,319 16.4 11.1 2- AFRICA 455 2.3 516 2.2 13.3 5,922 2.5 6,031 2.4 1.8 North Africa 267 1.3 253 1.1 -5.2 3,308 1.4 3,509 1.4 6.1 Other Africa 189 1.0 263 1.1 39.5 2,613 1.1 2,522 1.0 -3.5 3- AMERICA 1,446 7.3 1,555 6.7 7.6 20,233 8.6 18,981 7.5 -6.2 North America 990 5.0 1,186 5.1 19.8 15,084 6.4 13,953 5.5 -7.5 Central America And Caraips 106 0.5 92 0.4 -12.5 1,069 0.5 1,362 0.5 27.4 South America 350 1.8 277 1.2 -20.9 4,080 1.7 3,666 1.5 -10.1 4- ASIA 5,576 28.1 6,697 28.9 20.1 71,012 30.0 76,863 30.5 8.2 Near And Middle Eastern 1,462 7.4 1,794 7.8 22.7 21,410 9.1 22,214 8.8 3.8 Other Asia 4,113 20.7 4,903 21.2 19.2 49,602 21.0 54,649 21.7 10.2 5- AUSTRALIA AND NEW ZEALAND 55 0.3 212 0.9 285.4 861 0.4 1,318 0.5 53.1 6- OTHER COUNTRIES AND REGIONS 1,392 7.0 1,341 5.8 -3.6 12,608 5.3 13,424 5.3 6.5

TOTAL 19,828 100 23,137 100 16.7 236,545 100 251,651 100 6.4

(Million $)December January-December

Tariff RatesTariff Rates

Source: WTO Tariff Profiles, 2012


2) SERVICES2) SERVICES


Tourism: Besides increasing the number of tourist arrivals, creating a structure that improves service quality, targets high-income groups by diversifying marketing channels, preserves natural capital and sustainability, and stimulates those types of tourism where Turkey has comparative advantages

Construction, Engineering-Architecture, Technical Consultancy and Contracting Services: Establishing a structure that fits Turkey’s economic and social needs, that is compatible with high technology and international rules, that is sensitive to environment, that creates high value added, high foreign exchange inflow and high employment, that grants high service quality, and that relies on qualified human and physical capital.

Commercial Services: Increasing productivity and commercial trade volume in a competitive way, and to encourage technology and innovation.

Targets in ServicesTargets in Services


Turkey's Share in Global Services Exports (%)Turkey's Share in Global Services Exports (%)

Source: WTO

Turkey’s share in global exports of services was 0.99% in 2012.


Tourism Statistics (Quarterly)Tourism Statistics (Quarterly)


Tourists visited (Thousand), Source: TURKSTAT

Turkey ranks as the 6th in the world and the 4th in Europe among the most favourite tourism destinations.

Turkey’s income per tourist increased by 2.6% in 2012 compared to 2011.

Contracting Services AbroadContracting Services Abroad

4242

38 out of the world’s top 250 contracting companies are Turkish.

Turkey ranks as the 2nd country (following China) in terms of the number of top contracting companies.

Contributions to the overall economic performance: Creating foreign exchange inflow, exports, employment, technology transfer; adding to the machinery stock, facilitating internationalization


Regional Breakdown of Projects(%)

Years Projects CountriesProject Volume

(Million $)

Cum. Project Volume

(Million $)

Avr. Project Volume

(Million $)1971-2001 2006 69 43,252 43,252 22

2002 132 32 2,571 45,823 192003 270 36 4,490 50,313 172004 429 39 11,367 61,680 262005 408 34 12,375 74,055 302006 515 36 24,059 98,114 472007 570 45 25,260 123,374 442008 620 40 24,827 148,201 402009 474 45 21,667 169,868 462010 583 48 23,067 192,935 402011 505 50 20,489 213,424 412012 485 49 29,434 242,858 612013 377 44 31,519 274,379 842014 14 9 2017 276,396 144

Last updated on February 2014

Logistics 2013Logistics 2013

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Europe’s biggest truck fleet 45 thousands trucks and 1,420 companies Almost 1.2 million flights in 2013 2.6 million tonnes freight and 149.5 million passengers 25. biggest fleet in the world 52 airports and 76 ports Total length of divided highways will reach 15 thousand

kilometers. High-speed railway projects are carried out rapidly.


TurkeyTurkey’s ’s EnergyEnergy Perspective Perspective

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Turkey’s Energy Corridor Concept

Strategy is to act as a transit country for secure & commercially viable projects and to be an energy terminal. e.g. TANAP (Trans-Anatolian Natural Gas Pipeline) Project

In the long-term planning work, Turkey foresees to achieve the following targets in 2023 in the field of energy;

To be able to make complete use of its potential of indigenous coal and hydro resources,

To make maximum use of renewable resources, To incorporate nuclear energy into electricity generation To secure rapid and continuous improvement in energy

efficiency.

Some ongoing important energy projects that will help Turkey’s Energy Security;

•Mersin Akkuyu Nuclear Power Plant-Russia

•Sinop Nuclear Power Plant-Japan


C- INVESTMENTS, FOREIGN CAPITAL and C- INVESTMENTS, FOREIGN CAPITAL and INCENTIVESINCENTIVES


Investment Climate in TurkeyInvestment Climate in Turkey

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1- SOUND ECONOMIC PERFORMANCE 6- CENTRAL LOCATION2- YOUNG and DYNAMIC POPULATION

7- ENERGY CORRIDOR and TERMINAL of EUROPE

3- QUALIFIED and COMPETITIVE LABOR FORCE

8- LOW TAX RATES and INCENTIVE FACILITIES

4- LIBERAL and INNOVATIVE INVESTMENT CLIMATE

9- CUSTOMS UNION with EU and OPEN ECONOMY

5- INFRASTRUCTURE 10- DOMESTIC MARKET

10 REASONS TO INVEST IN TURKEY


Time Time RRequired to equired to SStart a tart a BBusinessusiness

The required time to start a business is 6 days in Turkey.

Source: Invest In Turkey


Skilled Labour AvailabilitySkilled Labour Availability

Scoring is between 0 and 10.

Source: Invest In Turkey


The Sectoral Breakdown of Foreign InvestmentsThe Sectoral Breakdown of Foreign Investments

Source: CBRT

*January-December

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(Million $) 2011 2012 2012* 2013*AGRICULTURE 32 43 43 37INDUSTRIAL SECTORS 8,037 5,479 5,479 4,810 Mining and Quarrying 146 213 213 250 Manifacturing 3,596 4,342 4,342 2,008 Production and Distribution of Electricity, Gas, 4,293 924 924 2,516SERVICES SECTOR 8,067 5,237 5,237 5,342

TOTAL 16,136 10,759 10,759 10,189

February February 2014 Ministry of Economy2014 Ministry of Economy

Breakdown of Foreign Investments by CountryBreakdown of Foreign Investments by Country

Source: CBRT

5151

* January-December

2011 2012 2012* 2013*1 Germany 665 491 491 1,8452 Netherlands 1,425 1,381 1,381 1,0243 Russia 762 11 11 8684 Azerbaijan 1,266 338 338 7765 Austria 2,418 1,519 1,519 6596 Lebanon 45 315 315 5747 Spain 2,251 193 193 5318 Japan 231 106 106 4939 Qatar 50 46 46 469

10 U.S. 1,403 439 439 34411 England 905 2,044 2,044 29712 Luxembourg 562 1,186 1,186 29513 Saudi Arabia 8 439 439 24314 France 999 86 86 22215 South Africa 0 0 0 22116 Kuwait 43 271 271 21217 Swiss 233 454 454 20118 United Arab Emirates 89 52 52 16419 Italy 111 154 154 14520 Bahrain 5 131 131 94

13,476 9,787 9,787 9,77116,136 10,759 10,759 10,189

LIST TOTALTOTAL

Million $


Investment Incentive SystemInvestment Incentive System

The current investment incentive system of Turkey is structured in four sub systems:

General Investment Incentive System Regional Investment Incentive System Investment Incentive System for Big Scale

Projects Encouraging the Strategic Investments


Investment IncentivesInvestment Incentives

Source: General Directorate of Incentive Implementation and Foreign Investment

5353

2011 4,386 53,725 125,5322012 4,311 57,743 146,9602013 4,985 93,868 190,385

Certificates Issued

Amount of Fixed Investments (Million TL)

Potential Employment

(People)

Region I Region II Region III Region IV Region V Region VI Various TOTAL2011 1,419 896 669 579 432 376 15 4,3862012 1,563 749 702 499 338 450 10 4,3112013 1,791 808 705 519 488 648 26 4,985

CERTIFICATES ISSUED


D - FREE ZONES IN TURKEYD - FREE ZONES IN TURKEY


Tax advantages for manufacturers Medium-and long-term investment view Availability to transfer profits Commercial facilities Exemption from customs duties Acquisition of the documents relating to the free movement of goods under

the scope of Customs Union with the EU Principle of equality No time restrictions Flexibility to adjust to the market needs and conditions Reliable inflation accounting Market access to domestic and foreign markets Reduced bureaucratic procedures and dynamic business management Strategic advantages Affordable and compatible infrastructure Supply chain opportunities

The Advantages of Free Zones for UsersThe Advantages of Free Zones for Users


Free Zones in TurkeyFree Zones in Turkey

57,010 people have been employed in Free Zones of Turkey in 2013.

5656February February 2014 Ministry of Economy2014 Ministry of Economy

Trade Flows of Free ZonesTrade Flows of Free Zones

In 2013 total trade volume of the Free Zones reached to 23.2 billion dollars, increasing 0.8% annually.

Source: General Directorate of Free Zones, Foreign Investments and Services

5757

Million $ 2008 2009 2010 2011 2012 2013From Domestic Market to Free Zones 3,195 2,177 2,295 2,668 2,971 2,887From Free Zones to Abroad 5,874 4,914 4,361 6,924 7,070 7,701From Abroad to Free Zones 8,248 5,493 6,626 7,253 7,258 7,490From Free Zones to Domestic Market 7,262 5,174 5,291 5,801 5,754 5,162

TOTAL TRADE VOLUME 24,578 17,757 18,572 22,646 23,053 23,240


Concentration in Free Zones by IndustriesConcentration in Free Zones by Industries

Source: General Directorate of Free Zones, Foreign Investments and Services

Istanbul Ataturk Airport FZ Services and SoftwareAntalya FZ Yacht-building, Medical EquipmentKocaeli FZ Ship-buildingAvrupa FZ Ready-WearMersin FZ Ready-WearBursa FZ Automotive sub-industriesIzmir FZ LeatherTUBITAK-MAM FZ R&D ActivitiesAdana-Yumurtalik FZ Ship Repair and Maintenance


E - E - BBIILATERAL, REGLATERAL, REGIIONAL, ONAL, PLURILATERAL and PLURILATERAL and MULTMULTIILATERAL LATERAL

TRADETRADE


Trade Relationships of Turkey with OthersTrade Relationships of Turkey with Others

Bilateral Trade Relationships of Turkey

Europe, Asia-Pacific, Eurasia, Middle East and North Africa, Sub-Saharan Africa, Americas

Regional and Multiple Trade Relationships of Turkey

EU, ECO, D8, BSEC, OIC, COMCEC

Multilateral Trade Relationships of Turkey

WTO, OECD, G20


Regional Breakdown of ExportsRegional Breakdown of Exports

Source: TURKSTAT * January-December** Except Lebanon and Kosovo

In January-December period of 2013, our exports to EFTA countries decreased by 35.8% annually. The annual increase of our exports to Turk Republics in the same period was 18.4% and Turk Republics became the fastest growing export destination of the regions above.

6161

(Million $) 2011 2012 Change %Share % (2012)

2012* 2013* Change %Share % (2013*)

CIS 13,377 15,075 12.7 9.9 15,075 16,935 12.3 11.2EFTA 1,887 2,601 37.8 1.7 2,601 1,669 -35.8 1.1Economic Cooperation Organisation 9,292 16,563 78.3 10.9 16,563 11,905 -28.1 7.8Organization of Islamic Conference 37,325 55,218 47.9 36.2 55,218 49,407 -10.5 32.5Black Sea Economic Cooperation 17,768 18,791 5.8 12.3 18,791 20,379 8.5 13.4FTA Countries** 13,602 14,576 7.2 9.6 15,138 14,942 -1.3 9.8OECD 67,114 66,290 -1.2 43.5 66,290 68,697 3.6 45.2Turkic Republics 5,040 5,841 15.9 3.8 5,841 6,913 18.4 4.6

TOTAL 134,907 152,462 13.0 100.0 152,462 151,869 -0.4 100.0


Chronological Evolution of the Relationship between Turkey and the EUChronological Evolution of the Relationship between Turkey and the EU

12 September 1963: Ankara Agreement 23 November 1970: The signing of the Additional Protocol 1 January 1973: Additional Protocol to come into force 14 April 1987: Turkey’s Application for Membership 6 March 1995: The Association Council Decision Establishing the

Customs Union 10-11 December 1999: Recognition of the Candidate Status of

Turkey at the Helsinki Summit 8 March 2001: The first Accession Partnership Document issued 17 December 2004: European Council decision to start

Negotiations with Turkey in Brussels Summit 3 October 2005: Start of the Negotiations between Turkey and

the EU 20 October 2005: Start of the Screening Process 13 October 2006: End of the Screening Process


EU Accession Negotiations Current StatusEU Accession Negotiations Current Status

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Negotiations for 13 chapters were opended, 1 chapter was temporarily closed up to the present.

Temporarily Closed (25) Science and Research (12 June 2006)

Opened (13 Chapters)

(4)Free Movement of Capital (18 December 2008)(6)Company Law (12 June 2008)(7)Intellectual Property Law (12 June 2008)(10)Information Society and Media (18 December 2008)(12)Food Safety, Veterinary and Plant Health (30 June 2010)(16)Taxation (30 June 2009)(18)Statistics (26 June 2007)(20)Business and Industry Policy (28 Şubat 2007)(21)Trans-European Networks (19 December 2007)(27)Environment (21 December 2009)(28)Consumer and Health Protection (19 December 2007)(32)Financial Control (26 June 2007)(22) Regional Policy and Coordination of Structural Instruments

Chapters for Which Turkey Has Presented It’s Negotiation Position Document to the Commission (2 Chapters)

(17)Economic and Monetary Policy (26) Education and Culture


EU Accession Negotiations Current StatusEU Accession Negotiations Current Status

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Screening Reports Approved at the Council of the European Union with Benchmarks (8 Chapters)

(1) Free Movement of Goods (3) Right of Establishment and Freedom to Provide Services (5) Public Procurement (8) Competition Policy (9) Financial Services (11) Agriculture and Rural Development (19)Social Policy and Employment (29) Customs Union

Draft Screening Reports are to be Approved at the Council of the European Union (9 Chapters)

(2) Freedom of Movement of Workers (13) Fisheries (14)Transport Policy (15) Energy (23) Judiciary and Fundamental Rights (24) Justice, Freedom and Security (30) External Relations (31) Foreign, Security and Defense Policy (33) Financial and Budgetary Provisions


Trade between Turkey and the EUTrade between Turkey and the EU

*January-DecemberSource: Data Source of the Ministry of Economy


1. EFTA (Norway, Switzerland, Iceland, Liechtenstein)

2. Israel

3. Macedonia

4. Bosnia and Herzegovina

5. Palestine

6. Tunisia

7. Morocco

8. Syria (**)

FTA CountriesFTA Countries

9. Egypt

•Albania

•Georgia

•Montenegro

•Serbia

•Chile

•Jordan

•South Korea

•Mauritius

•Lebanon*

•Kosovo*

(*) Agreements that are in the approval process

(**) Pending


1. Ukrain

2. Colombia

3. Ecuador

4. Malaysia*

5. Moldova*

6. Democratic Republic of the Congo

7. Ghana*

8. Cameroon

9. Seychelles

FTA Countries(On-going Negotiations)FTA Countries(On-going Negotiations)

10. Gulf Cooperation Council

11. Libya

12. MERCOSUR

13. Faroe Islands

14. Japan

15. Singapore

16. Peru

17. Mexico


* Negotiations completed.

Our exports to FTA Countries decreased %1.3 in 2013. The share of FTA Countries in total exports reached

%9.8. Turkey recorded a trade deficit of 8.5 billion USD in 2012

with FTA Countries, while there was a trade deficit of 2.3 billion USD in 2002.

Trade with FTA CountriesTrade with FTA Countries


Trade Representatives AbroadTrade Representatives Abroad

178 trade representatives from the Ministry are serving in 110 countries, 160 locations and 6 offices abroad.


Daimi Temsilci Yardımcılığı

Ticaret Müşavirliği

Ticaret Ataşeliği

İrtibat Büroları

AFRİKA

KahireNairobi PretoriaRabatTrablusTunusKazablanka

ASYA

Astana Aşkabat Bangkok Bişkek Cakarta Duşanbe Hanoiİslamabad Kabil Kuala Lumpur Manila Pekin Seul Singapur

AVRUPA/KAFKASYAAVRUPA/KAFKASYAABDTÖOECDAtina Bakü Belgrad Berlin Bern BratislavaBrüksel Budapeşte Bükreş Dublin Helsinki Kiev Kişinev Kopenhag Lahey LizbonLefkoşa

Londra LubliyanaMadrid Minsk MoskovaOslo ParisPodgoricaPragPriştineRomaSaraybosna Sofya Stokholm TiflisTiran Üsküp Varşova Viyana Zagreb

BarselonaBatumDüsseldorfHamburgHannoverKazanMarsilyaMilanoMünihNovorossiskOdessaRotterdamSelanikSt. PetersburgStutgartBirminghamKrasnodarNovosibirskYekaterinburg

Taşkent Tokyo Ulan Bator Yeni Delhi AlmatıGuangzhouHong Kong KaraçiMumbaiŞangayGeorgetown

AbujaAddis Ababa AkraCezayirDakarDarüsselamHartumİskenderiye

Buenos Aires KarakasMexico CityOttavaSantiagoVaşingtonHoustonLos Angeles

AMERİKA

ORTA DOĞUORTA DOĞUAbu Dhabi Amman BağdatBeyrutDohaKuveytManama

MuskatRiyadSana ŞamTahranTel Aviv Basra

CiddeDubaiErbilHalepKudüsMusulTebriz

SidneyMelbourne

AVUSTRALYAAVUSTRALYA

New YorkSao PauloŞikagoTorontoMiamiSan FranciscoSeattle

GEORGETOWN

Locations of Trade RepresentativesLocations of Trade Representatives


• Export Oriented Production Strategy and Input Supply Strategy

• Market Access Strategy• Improving the Investment Climate• Trade Agreements• Next-Generation Free Zones• Trade in Services and Turkish Investments

Abroad • Market Surveillance and Inspection• Strengthening the Organization Abroad

Projects with Future ProspectsProjects with Future Prospects


ECONOMIC OUTLOOK

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