ECONOMIC OUTLOOK OF TURKEY

Alexia Manousou, First Secretary for Economic & Commercial Affairs

Consulate General of Greece in Istanbul -Office of Economic & Commercial Affairs

1

Turkey at a glance

Population: 75,6mil. 0-14 : 27,3%, 15-64 :65,2 65+ : 7,5%(2012 est.)

Average age: 30 years old

Urban population:70% Major cities: Istanbul (12,9 mil.), Ankara (4,2 mil.), Izmir (2,7 mil.),

Bursa (1,6 mil.) 23,9 % of total consumption expenditure is done by households in Istanbul

Turkey’s west-east gap in revenues

2

Economic Environment

GDP per capita 10.444 USD GDP Growth (2011) 8,5% GDP Growth (2012) 3% Inflation 6,16% (Jan. 2013) Unemployment 10,1% (Dec. 2012) Total exports in 2012 152,536 bil. $ Total imports in 2012 236,544 bil. $ Trade Balance deficit 84,008 bil. $ Current Account deficit. 7,3% of GDP Unregistered economy: 32,1% Exchange Rate Euro/TL 1/2,35

3

4

TURKISH IMPORTS 2011-12 – Top 20 Chapters (Source: Tuik)

HS2 Product Category2011Value

(thousand.$)

2012Value

(thousand.)Variation

(%)Compositio

n(%)

27 Mineral fuels, minerals oils and product of their distillation 54 117 539 60 116 858 11 25,4

84 Boilers, machinery and mechanical appliances: parts thereof 27 110683 26 314 690 -3 11,1

72 Iron and steel 20 424 235 19 642 041 -4 8,3

85 Electrical machinery and equipment: parts thereof 16 835 117 16 279 679 -3 6,9

87 Vehicle other than railway or tramway rolling_stock,parts thereof 17 184 080 14 514 260 -16 6,1

39 Plastic and articles thereof 12 578 501 12 505 303 -1 5,3

71 Pearls, precious stones, precious metals: and articles thereof 7 022 384 8 529 940 21 3,6

29 Organic chemicals 5 504 435 5 064 621 -8 2,1

90 Optical,photographic,cinematographic,measuring 4 116 482 4 055 501 -1 1,7

30 Pharmaceutical products 4 697 445 3 995 651 -15 1,7

74 Copper and articles thereof 4 118 790 3 878 283 -6 1,6

88 Aircraft and parts thereof 3 932 966 3 157 690 -20 1,3

40 Rubber and articles thereof 3 361 769 3 035 461 -10 1,3

76 Aliminium and articles thereof 3 258 885 2 984 961 -8 1,3

48 Paper & paperboard 3 109 936 2 882 669 -7 1,2

52 Cotton,cotton yarn and cotton textiles 3 608 860 2 377 547 -34 1,0

73 Articles of iron and steel 2 521 135 2 367 172 -6 1,0

55 Man_made fibres (discontinuous) 2 467 117 2 223 177 -10 0,9

54 Man_made filament 2 007 424 2 173 345 8 0,9

38 Miscellaneous chemical products 2 204 854 2 053 155 -7 0,9

5

Greek exports to Turkey 2011-2012 (Source: tuik)

HS2 Product category 2011 2012 2011-2012 Variation Composition 2012

27Mineral fuels, minerals oils and

product of their distillation 1.672.242.727 2.533.938.244 51,5% 71,5

52Cotton, cotton yarn and cotton

textiles 121.826.355 261.162.404 114,3% 7,439 Plastic and articles thereof 220.956.252 195.415.297 -11,5% 5,576 Aliminium and articles thereof 66.900.279 86.435.985 29,2% 2,474 Copper and articles thereof 35.772.927 56.869.712 58,9% 1,6

41Row hides and skins (other than

furskins) and sole leather 36.844.754 39.775.967 7,9% 1,110 Cereals 8.038.796 38.313.319 376,0% 1,1

84Boilers, machinery and mechanical

appliances: parts thereof 45.990.223 28.664.066 -37,6% 0,8

89 Ships, boats and floating structures 25.639.212 28.661.721 11,7% 0,8

85Electrical machinery and equipment:

parts thereof 33.604.348 19.735.321 -41,2% 0,6

48Paper & paperboard:articles of paper

pulp of paper or of paperbo. 18.410.429 16.945.598 -7,9% 0,5

32Tanning and dyeing extracts: fillers

andstoppings : inks 15.799.785 15.198.012 -6,0% 0,431 Fertilisers 17.884.521 15.133.078 -15,3% 0,4

33

Essential oils and resinoids:perfumery, cosmetic or

toilet prep. 7.838.029 11.797.581 50,5% 0,3 TOTAL 2.568.826.355 3.539.868.997 37,8% Total imports excluding fuels 896.583.628 1.005.930.753 12,20%

6

2008 2009 2010 2011 2012

Imports 1611.21 1181.44 1042.06 973.46 838.39

Exports 578.18 557.280000000001 795.23 699.2 810.48

Trade Volume 2189.38 1738.72 1837.29 1672.66 1648.87

Balance -1033.023 -624.16 -246.83 -274.26 -27.91-1,250

-750

-250

250

750

1,250

1,750

2,250

Bilateral Trade Greece - Turkey 2008-12 excluding fuels

Val

ue(

mil

.€)

Sectors in Turkish economy

Food & Beverages Construction & Building Materials Energy – RES (New Law) Pharmaceuticals – Cosmetics

7

Food & Beverages8

Since 1996: Customs Union Agreement EU-Turkey. Nevertheless, in some agricultural products Turkey imposes high tariffs

Examples: 102.6% wheat flour, cheese up to 180%, table olives-19.5% -31.2% olive oil, 38.5% honey, wines -50%, figs - 45.9%, citrus - 54%, grapes - 54.9%, watermelons - 86.4%, apples - 60.3%, 55.8% peaches.

Potential for: cocoa, chocolate - coffee - wine – frozen -biological - ready to cook or eat food - gourmet - health food products

VAT: 8% (1%).

Beverages & Spirits - Chapter 22 Turkish Imports

9

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

• High special consumption tax• VAT:18%• Duties for wine: 50%

Construction sector10

Dynamic sector – second worldwide Represents 6% of the GDP of Turkey About 100 contractors undertake 90% of the

projects. International presence: 2012: 33 t /

construction companies included in "The World's Top 225 International Contractors" list.

Contracts in Turkmenistan, Ethiopia, Iraq, S.Arabia, Russia, Kazakhstan, Bosnia and Herzegovina, Morocco, Azerbaijan, etc.

Construction sector (2)11

Major projects underway: Istanbul – Izmir highway (roads, bridges), third Bosphorus bridge, satellite cities, large projects in Ankara (subway etc). 112 projects worth 8.96 billion dollars.: 16 dams, 49 hydropower stations, irrigation systems, water treatment and purification

Foreign companies undertake projects through joint ventures with Turkish counterparts (expertise )

Opportunities in projects aiming at reducing energy costs - need for greater energy efficiency

Building Materials12

The building materials industry is the third largest in Turkey

Turkey produces and exports a variety of building materials: cement, ready-mix concrete, aerated concrete, steel pipe, glass, glazing, ceramic coating, ceramic sanitary ware, construction coatings, natural bubbles, raw marble, plastic window frames, plastic prefabricated elements, aluminum

Interest for Medium – High technology productsSectors: insulation, electrical equipment, piping, coatings,

paints, radiators, aluminum material,

Renewable Energy Sources

Lignite : appr. 10,000 MW Lignite firing power plants are in operation Hydraulic Energy : 40% of the hydro capacity is in use, by means of

16,000 MW power plants which are in operation now. Wind power: Only 1200 MW is used by 600 pieces of wind turbines. GEOTHERMAL:: small part of this capacity is operation ( appr. 200 MW ) Solar Energy: the used installed power capacity today is negligible due

to the unit cost of PV power

Turkey is not self sufficient in energy resources. Approximately 76 % of Turkey’s energy requirement was met with the imported energy. Diversification of imports in terms of sources, routes and technologies has long been an important policy tool for Turkey to improve its energy supply security.

13

New Law for RES in Turkey

INCENTIVES FOR RENEWABLE ENERGIES IN TURKEY:

14

Pharmaceuticals

16th worldwide in terms of production significant lack of R& D and high

dependence on imports. 300 companies 20 companies hold 66% market share The pharmaceutical market includes

23,000 pharmacies and 500 drug stores

15

Imports of pharmaceuticals in Turkey

In 2012 Total imports reached 4 billion dollars. - 15% Imports from Greece reached 7.6 million €, - 31%

16

Amounts in $

2006 2007 2008 2009 2010 2011 20120

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

4,500,000,000

5,000,000,000

Imports of pharmaceuticals in Turkey (2)

17

Imports of raw materials and semi-finished products: 25% of total imports

Big amount of original drugs imported while generics are produced mostly domestically

No import duties for EU Registration by Turkish natural / legal persons Requirements: certificate of conformity (Ministry

of Health), certificate of good manufacturing practice (GMP) - Delays

Cosmetics

170,000 products 1,435 local companies The 1/3 of the market for hair care

products Interest in natural products in sunscreens, men’s skin care and

baby care products Imports of chapter 33 exceed 1 billion. $

18

CosmeticsImports from Greece

In 2009, the share of Greek exports accounted for 0.44% of total Turkish imports whereas in 2012 it increased to 1.02%.

The last 4 years Greek exports increased by 314%.

19

  2009 2010 2011 2012

Greek exports to Turkey

3.758.040 4.531.680 7.838.029 11.797.581

Total turkish imports

839.860.379 984.293.208 1.071.449.336  1.027.869.786

Thank you for your attention

Embassy of Greece in Ankara - Office of Economic & Commercial Affairs :

ecocom-ankara@mfa.gr

Consulate General of Greece in Istanbul -Office of Economic & Commercial Affairs:

ecocom-istanbul@mfa.gr

Website : www.agora.mfa.gr

20