Transcript Where is Turkey?

Agenda
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Pictures from Turkey
Description of the Economy
How 2001 Crises Happened
IMF agreement and Recent Developments
Political Agenda: EU
Impediments to Growth
Latin American Case
Export Credit Agencies
How to analyze country and sector risk: Argentina
Where is Turkey?
Well, where the continents meet….
A lot of history…..
….and history…..
…and nature….
..and Istanbul…..
Descriptive Statistics
Main Trading Partners are European Countries
Economy is becoming more integrated with the
world.
GDP growth has been very volatile
Gross domestic product
(market prices)
1998
1999
2000
2001
2002
200.3
184.9
199.3
145.6
183.1
52,224.9
77,415.3
124,583.5
178,412.4
276,003.0
116.1
110.6
118.8
109.9
118.4
3.1
-4.7
7.4
-7.5
7.8
At current prices
3,025
2,749
2,918
2,100
2,605
At constant (1987) prices
1,754
1,646
1,740
1,585
1,685
1.5
-6.2
5.7
-8.9
6.3
Total (US$ bn)
At current prices
Total (TL trn)
At current prices
At constant (1987) prices
% change, year on year
Per head (TL)
% change, year on year
Sources: State Institute of Statistics; UN Population Data Base and EIU estimates for population data.
Budget deficit has been growing
Debt Spiral
External debt
(US$ m unless otherwise indicated; debt stocks as at year-end)
1998
1999
2000
2001
2002
Public medium- & long-term
51,964
52,695
61,232
70,084
85,422
Private medium- & long-term
23,680
27,367
29,153
27,667
30,974
Total medium- & long-term debt
75,644
80,062
90,385
97,707
116,396
17,662
16,887
20,062
30,538
40,016
Bilateral
9,708
9,138
8,678
8,501
9,157
Multilateral
7,954
7,750
11,385
22,037
30,859
57,982
63,174
70,323
67,169
76,380
Short-term debt
20,774
22,921
28,301
16,241
15,155
Total external debt
96,418
102,983
118,686
113,948
131,551
Principal repayments
11,690
12,866
15,638
17,489
22,278
4,823
5,450
6,299
7,134
6,400
16,513
18,316
21,937
24,623
28,678
48.1
55.7
59.6
78.3
71.9
26.4
34.6
37.2
43.3
47.9
Official creditors
Private creditors
Interest payments
Total debt service
Ratios (%)
Total external debt/GDP
Debt-service ratio
a
a
Debt service as a percentage of earnings from exports of goods and services.
Source: Undersecretariat of the Treasury.
How high real interest rates affect the budget
What is currency crises: Kemal Dervis explains
2001 Attack on TL to IMF
Primary Budget Balance is within IMF targets
Industrial production is growing
Real GDP and Productivity Growth
Investment is picking up increasing imports
Inflation is decreasing
Stock market 100% return in dollars
However we did not see a recovery in the
employment statistics yet
Don’t Believe EIU Forecasts
Don’t Believe EIU Forecasts
Other Major Problems Missing Attention of
Investors: FDI inflows are low.
As a percentage of GDP
Investment done by private sector but very low
rates of FDI
Investors’ View: Impediments to FDI
4.50
80%
4.00
70%
3.50
60%
3.00
50%
2.50
40%
2.00
30%
1.50
1.00
20%
0.50
10%
0.00
0%
Ins ta bility
Go ve rnm e nt We a k J udic ia l
Ha s s le
S ys te m
Source: FIAS field survey.
significance
Ta xa tio n
C o rruptio n
De fic ie nt
Infra s truc ture
percentage of respondents
Info rm a l
Ec o no m y
Turkey’s Bid for EU
 German Chancellor Gerhard Schroeder’s official visit to Turkey in late
February reinforced the already positive view of the current German
government for Turkey’s EU bid.
 British Foreign Secretary Jack Straw said last week in Turkey that he
believed the EU would agree in December to start accessions talks with
Turkey.
 This leaves France as the key source of uncertainty in shaping the EU’s
political view on Turkey’s bid for membership.
 This leaves France as the key source of uncertainty in shaping the EU’s
political view on Turkey’s bid for membership.
 Chirac seems to be supporting Turkey
 However his party publicly opposes
 What will happen if Turkey is turned down
Comparison of Turkey with EU countries
Expectations of Investors HSBC Survey
Expectations of International Investors HSBC
Survey
Expectations of International Investors HSBC
Survey
Risk Insurance
Litigation : Insurance companies sue the US
medical equipment exporter for not being
careful in credit policies.
US Exporter claims that bad debts are due
to country risk
Sources of funding for developing countries
How ECA Credits Work
This was the missing part
Export Credit
Importers Bank
Agency
Country Risk Guarantee
Exporters Bank
Credit Risk Guarantee
Credit Agreement
Money
Exporter
Importer
Goods
Latin America
0
7/2/02
4/2/02
1/2/02
10/2/01
7/2/01
4/2/01
1/2/01
10/2/00
7/2/00
4/2/00
1/2/00
10/2/99
7/2/99
4/2/99
1/2/99
10/2/98
7/2/98
4/2/98
1/2/98
Latin America
USD EXCHANGE RATES
30
25
Argentine peso
20
EURO
15
Brazilian real
10
Mexican peso
Uruguayan peso
5
8000
7000
6000
5000
4000
3000
2000
1000
0
6/29/2002
3/29/2002
12/29/2001
9/29/2001
6/29/2001
3/29/2001
12/29/2000
9/29/2000
6/29/2000
3/29/2000
12/29/1999
9/29/1999
6/29/1999
3/29/1999
12/29/1998
9/29/1998
6/29/1998
3/29/1998
12/29/1997
9/29/1997
6/29/1997
3/29/1997
12/29/1996
9/29/1996
6/29/1996
3/29/1996
12/29/1995
Latin America
Emerging Market Soverign Risks - J.P. Morgan Indicators
EMBI
EMBI+
Argentina
Brazil
Mexico
Venezuela
Argentina: Is it credit or sovereign risk?
Argentina Medical Equipment
Import Market 2000
5%
14%
43%
US
Italy
Japan
16%
Germany
Brazil
22%
Health Care Sector, Structure
 Re-conversion of the healthcare system In the early 90s, the Government of
Argentina began the process of a series of profound administrative and
economic reforms.
 In 1995, the Argentine Government and the World Bank signed an
Agreement to finance the restructuring of the Union-run healthcare
organization Obra Sociales
 The aim of the restructuring is to reduce the number of OS and optimize the
surviving ones thus making a healthier Healthcare System.
 Since 1997 the obras sociales have undergone restructuring through
increased competition and consolidation. Whereas in 1996 there were 330
health trust funds, there are now only 220.
 The funding of obras sociales has also diminished in recent years owing to
lower compulsory payroll contributions and higher unemployment.
 According to an estimate, nearly half of the obras sociales are experiencing
some financial difficulties.
Argentina
Ja
n9
M 4
ay
-9
Se 4
p9
Ja 4
n9
M 5
ay
-9
Se 5
p9
Ja 5
n9
M 6
ay
-9
Se 6
p9
Ja 6
n9
M 7
ay
-9
Se 7
p9
Ja 7
n9
M 8
ay
-9
Se 8
p9
Ja 8
n9
M 9
ay
-9
Se 9
p9
Ja 9
n0
M 0
ay
-0
Se 0
p0
Ja 0
n0
M 1
ay
-0
Se 1
p01
ja
n0
M 2
ay
-0
2
%
Argentina
Use of Installed Capacity
85.0
80.0
75.0
70.0
65.0
60.0
55.0
50.0