Notes on European Economy, Notes on European Economy, Turkey and IstanbulTurkey and Istanbul

Prof. Dr. Murat Yulek

Istanbul Chamber of Commerce

25 November, 2011Istanbul

Organization

European economyTurkey: some economic highlightsRapidly developing infrastructureSome notes on Istanbul

European Economy

European Tribulations: Slow Growth

Source: IMF WEO

European Tribulations: Sovereign Debt & Default Risks

Comparison of Consolidated Euro Area, U.S. and Japanese Banking Sectors

Source: Interim Report on Cumulative Impact on the Global Economy of Proposed Changes in the Banking Regulatory

  Euro Area USA Japan

Number of banks 6,458 6,839 148

Total assets (trillion euro) 31.1 11.8 8.5

Assets / GDP (%) 346.6 121.1 168.8

Regulatory capital 12.5 14.2 9.6

Tier 1 capital 9.4 11.4 6.8

Liquid asset ratio 5.9 19.3 16

Share of banks in credit intermediation

73.8 23.6 52.6

Population (million) 501.1 310.6 127.1

Size of The Banking Sector in Europe’s Regions 2009

Source: EBF

European Tribulations: Bank Recap Needs

Country Capital shortfall (€bn) Number of banks failing the test

Total number of banks participating in the

stress test

France 16 4 4

Germany 6 4 12

Greece 14 6 6

Italy 23 5 5

Spain 41 17 25

UK 0 0 4

Other EU Countries 22 19 38

Total 122 55 90

Source: AXA-IM Research

European Tribulations: Sovereign Debt & Default Risks

Source: IMF Database

Projections

European Tribulations: Sovereign Debt & Default Risks

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European Tribulations: Sovereign Debt & Default Risks

European Tribulations: Budgetary Imbalance

Source: IMF WEO

Projections

Source: IMF WEO * Germany, France, Italy, UK, Spain

Projections

European Tribulations: Budgetary Imbalance

European Tribulations: (Further) Rising Uncertainty (Globally)

billion euro

Budget Deficit Sovereign Debt

2000 2010 2016 2000 2010 2016

France -21 -151 -38 826 1640 2110

Germany 27 -82 -1 1232 1999 2140

Spain -6 -98 -59 374 639 981

Italy -10 -71 -54 1300 1843 2226

UK 15 -176 -30 462 1300 1867

European Tribulations: Budgetary Imbalance & Sovereign Debt

Turkey: Some Economic Highlights

(Too) Rapid Growth

Rapidly Growing Exports…

… with global integration but badly deteriorating trade balance

Young (and Still Growing) Population

Population (millions)

Median age (years)

Population aged 15-64 (millions)

2010 2050 2010 2050 2010 2050

Turkey 73 92 28.3 42.3 49  59

Germany 82  75 44.3 49.2 54  41

France 63 72  39.9 42.7 41 42

UK 62  73 39.8 42.9 41 43

Italy 61 59 43.2 49.6 40  31 

Spain 46  51 40.1 48.9 31  27 

Europe 738  719  40.1 45.7 505 412

Source: UN Stat

Young (and Still Growing) Population

  2010 2050

Turkey 1.14 0.08

Germany -0.20 -0.34

France 0.51 0.23

UK 0.60 0.15

Italy 0.23 -0.20

Spain 0.62 0.03

Europe 0.11 -0.19

Source: UN Stat

Population Growth Rate (%)

Turkey: The Banking Sector Weathered the Storm Well

Total assets 498

Equity capital 61

Total deposits 291

Total credits 273

Annual credit growth (%) 36

CAR (%) 16.4

Gross NPL (% of total credit portfolio) 2.80

Net NPL (% of total credit portfolio) 0.51

Consolidated Banking Sector (End-September 2011, billion euro)

Source: BRSA

Strong Fiscal Balance

Strong Fiscal Balance

With Deterioriating External Balance

Some Notes on Istanbul*

*Assistance of the Istanbul Development Agency in data and information acjnowledged with thanks.

If the earth were a single state, Istanbul would be its capital. Napoleon Bonaparte

 Population (millions,

2010)

Ratio to National Population (%) Area (km²) Population Density (Population/km²)

Istanbul 13 18% 5,313 2,551

Turkey 74 100% 785,347 96

EU (27) 501 680% 4,422,773 113.3

ISTArBUL

15-64 years (2010) 71% of total  

Median Age(2010) 30

Permanent foreign residents  (officially registered, 2009) 42,228

Actual foreign residents  At the order of  few hundred thousand

Istanbul: Population Dynamics

Ranking in Europe

Ranking in the World 2025 Estimates 2008 GDP City Country

1 5 4 565 London The UK

2 6 8 564 Paris France

3 15 12 321 Moscow Russia

4 26 32 230 Madrid Spain

5 34 28 182 Istanbul Turkey

6 35 42 177 Barcelona Spain

7 43 53 144 Rome Italy

8 46 65 136 Milan Italy

9 50 67 122 Vienna Austria

10 66 76 98 Lisbon Portugal

Istanbul: 5th Largest European City in Terms of GDP

In PPP terms Istanbul is probably the largest European City.

Istanbul Economics: Rapid Growth

Istanbul Economics: Employment by Sectors 2010

World Ranking City Country

1 Istanbul Turkey

2 Shenzhen China

3 Lima Peru

4 Singapore Singapore

5 Santiago Chile

6 Shanghai China

7 Guangzhou China

8 Beijing China

9 Manila The Philippines

10 Rio de Janeiro Brazil

Istanbul Economics: Metropolitan Economic Performances After the Financial Depression 2010

Source: Brookings/LSE Global Metro Monitor

Company Sector Net Sales (bn $)

FORD Automotive 3.42

OYAK RENAULT Automotive 3.31

TOFAŞ Automotive 3.11

ARÇELİK Electrical Machinery 2.92

AYGAZ Lpg/Energy 2.27

İÇDAŞ ÇELİK Iron-Steel 2.01

HABAŞ Industrial Medical Gas 1.62

VESTEL Electronics 1.38

MERCEDES-BENZ Automotive 1.27

UNILEVER Consumer Products 1.20

Istanbul Economics: TOP 10 Companies

Istanbul Turkey Istanbul’s Share

Patent Applications 1,370 3,250 42%

Utility Model Applications 1,384 2,994 46%

Brand Name Applications (2009) 30,832 59,838 51%

Industrial Design Applications 3,444 6,567 52%

Istanbul Economics: R&D and Foreign Trade (2010)

 billion $Istanbul Turkey Istanbul’s Share

Exports53.17 113.9 47%

Imports98.40 185.5 53%

Business Services 21%

Automotive 15%

IT & Telecommunication 10%

Electrical & Electronics 10%

Machinery & Equipment 9%

Transport & transport Services 9%

Metals 7%

Food 5%

Plastic & Rubber 5%

Other 9%

Istanbul Economics: FDI inflows (2010)

MASS TRANSPORTATION (2009)

  # of Vehicles Daily # of Passengers Share %

Land Transportation 1,668,131 vehicles 10,352,000 88.30%

Sea Transportation 314 vessels 380,000 3.30%

Rail Systems 146.5 km rail line 989,548 8.40%

Total 11,721,548 100%

Istanbul : Transportation

AIRPORTS (millions, 2010) Domestic Lines International Lines Total

Atatürk 12 20 32

Sabiha Gökçen 7 4 11

Total 19 24 43

There, God and human, nature and art are together, they have created such a perfect place that it is valuable to see.

Lamartine

Incoming Foreign Tourists (2010)

Congresses and Events (2011, National and International)

Istanbul 7,824,994 416

Turkey 28,632,204 1149

Istanbul’s Share 27% 36%

Istanbul : Tourism

Rank in Europe City Country

1 London The UK

2 Paris France

3 Brussels Belgium

4 Berlin Germany

5 Frankfurt Germany

9 Zurich Switzerland

10 Moscow Russia

11 Istanbul Turkey

12 Munich Germany

13 Milan Italy

Istanbul : 11th in the Europe’s 40 top Cities*

Source: Wealth Report 2010 (Citibank and Knight Frank)

* Based on the following criteria:

• Economic Activity,

• Politica Power,

• Knowledge & Influence,

• Quality of Life

Istanbul : 17th in the Global Cities Endex (2010)

Ranking in

Europe

Ranking in the World Score City Country

1 2 6.22 London The UK

2 4 5.35 Paris France

3 11 3.29 Brussels Belgium

4 16 3.03 Berlin  Germany

5 17 3.02 Madrid Spain

15 33 2.33 Munich Germany

16 37 2.23 Copenhagen Denmark

17 41 2.14 Istanbul Turkey

18 42 2.06 Milan Italy

19 44 1.84 Dublin Ireland

Source: A.T. Kearney Global Cities Index

Istanbul : Ranked Top in Real Estate Investment Potential

Source: Urban Land Institute

*performance of existing investments,

Istanbul : Ranked Top in Real Estate Investment Potential

Source: Urban Land Institute

OFFICE COSTS IN GLOBAL FINANCIAL CENTERS

Annual Gross Cost (2010, €/m2/year)

Tokyo 1441

London (West End) 1220

Hong Kong 1207

Dubai 899

Mumbai 809

Moscow 768

Milan 667

Istanbul 369

Istanbul : Real Estate

Source: Cushman & Wakefield

BEST CITIES IN TERMS OF AVAILABLE OFFICE SPACE (2010)

Rank Score City Country

1 0.63 Berlin Germany

2 0.59 Manchester The UK

3 0.56 Madrid Spain

4 0.54 Birmingham The UK

5 0.53 Barcelona Spain

14 0.32 Dublin Ireland

15 0.32 Istanbul Turkey

16 0.31 Lyon France

17 0.31 Stockholm Sweden

18 0.30 Amsterdam The Netherlands

Istanbul : Real Estate

Source: Cushman & Wakefield