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DEVELOPMENTS IN THE TURKISH ECONOMY The developing countries have been taking the advantage of the positive environment due to the increasing global liquidity and decreasing risk perception since 2001. Turkey has been one of those countries that falls under this group. Initiation of access negotiations period with the European Union had a direct impact on the increasing capital inflow to Turkey by both direct and portfolio investments. Consequently this has empowered YTL's strength in terms of growth in productivity and brought in a recession in inflation. 2006 has been the most successful year in budget realization. While the primary surplus increased to 7.6% of the GNP, the rate of the budget deficit to the GNP remained at 0.7%. This success provided that the Maastricht criteria has been satisfied by far. In addition to that, the rate of the budget deficit to the GNP is lower than that of many leading European Union countries. In 2006 January-December period, compared to the same period of 2005, the export volume has reached to 85,1 billion US Dollars with an annual increase of 15.9% while the import volume has reached to 137 billion US Dollars with an annual increase of 17.3%. The foreign trade deficit which was 43,3 billion US Dollars in 2005 January-December period has reached to 51,9 billion US Dollars with an annual increase of 19.8% in 2006. The current account deficit volume of 2006 that seems to be the major problem of Turkish economy has reached the record levels in conjunction with the foreign trade deficit of 2006 May-June period. The current account deficit which was 22,8 billion US Dollars in 2005 has reached to 31,3 billion US Dollars with an annual increase of 37.2%. One of the most successful issues in the economic expansion period for the last four years in Turkey has been the rate of inflation. However, there has been a pause in this success in 2006. While the rate of the Consumer Price Index(CPI) has been 7.7% at its lowest as of the end of 2005, it started to increase progressively from the beginning of 2006. The inflation rate which was 11.58% in Producer Price Index (PPI) and 9.65% in Consumer Price Index (CPI) has exceeded 5% that was the target inflation rate for 2006. The rate of the industrial production in 2006 has reached to 6% exceeding the rate of 5.4%. In spite of the increase in interest and foreign Exchange rates due to the fluctuation in 2006 May-June period, this achievement shows that the durability and the resistance of the industry and economy has significantly increased. The government has declared a total sum of 344,8 billion YTL debts as the end of 2006. This can be sub devided as followed: 216,8 billion YTL is based on domestic currency, 126,4 billion YTL is derived from foreign currency exchanges, and the remaining sum of 1,7 billion is the result of the currency based foreign debts. The total debts of 2006 can be classified in percentages as followed indicated : 52.2 % to domestic market, 20.7 % to government intstitutions, and the remaining 27.1 % is based on foreign debts. The domestic debt of the Treasury has reached to 251,5 billion YTL in 2006 with an annual increase of 2.7% compared to that of the end of 2005. The pay back of 157,6 billion YTL was performed during 2006 based on the partitioned sum of 118,9 billion with an interest of 38,7 billion YTL in total. In addition to that another 125,6 billion YTL domestic debt was practiced. The compound interest rate of the second hand bond market which has been 13.9% at the beginning of 2006 has tended to increase rapidly and reached to 23% as of May. The interest rate of public borrowing has been affected by the rise in funding costs due to the Central Bank's interest rate increase and the compound interest rate of the treasury bond due on August 13, 2008 which are traded most in the market has been 21.15% at the end of 2006. The average annual compound interest rate of the domestic borrowing auctions has been 18.2% in 2006. Istanbul Stock Exchange-100 Index has closed the year at 39.777,70 points in 2005 and at 39.117,46 with an annual decrease of 1.64% and 653,24 points in 2006. |
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