Turkey Business Forecast Q1 2007

Content

• Chapter 1: Political Outlook
  • Executive Summary
  • Political SWOT Analysis
  • BMI Political Risk Ratings
  • Domestic Political Outlook
  • Liberalisation Hopes Fade
  • The EU Commission's 2006 Turkey progress report highlights the comparatively slow progress made over the ~
  • past year in political and economic liberalisation With national elections due next November, momentum will,
  • if anything, slow further While this poses few genuine economic risks at a time of high growth and strong
  • investor confidence, it does suggest that upside potential to political risk is limited
  • Table: Cabinet List
  • Foreign Relations
  • Partial Suspension of Accession Negotiations?
  • The European Commission's annual report on Turkey's accession progress made for fairly dispiriting reading
  • Overall, the introduction, passage and implementation of EU-compatible legislation have slowed - a worrying
  • sign given the ruling AKP's overwhelming parliamentary majority More importantly, Ankara's failure to allow
  • Cypriot-registered vessels access to Turkish ports is testing the EU's patience to the limits The most likely
  • scenario is that accession negotiations will be selectively suspended in December That said, the risks are
  • firmly to the downside, with a full suspension more likely than a lifting of the Cyprus embargo
• Chapter 2: Economic Outlook
  • Executive Summary
  • SWOT Analysis
  • BMI Economic Risk Ratings
  • Introduction
  • Economic Activity - A Modest Downturn
  • Economic Activity
  • Growth To Recover In 2007
  • The lira's sharp decline - or rather the hike in interest rates in response - has dampened growth prospects for
  • 2006 and into 2007 However, though downside risks remain, growth should continue to be fairly solid over
  • the forecast period
  • Table: Economic Indicators
  • Balance of Payments
  • BoP: Current Strength Hides Medium-Term Weakness
  • The current account deficit should moderate gradually over the medium term However, high capital flows
  • will be required to fund the deficit, leaving the overall balance of payments vulnerable to investor confidence
  • Table: Balance of Payments, US$bn
  • Monetary And Exchange Rate Policy
  • Inflation To Abate...
  • Inflation should gradually fade after the spike in Q306 trigged by the mid-year currency sell-off Though our
  • medium-term forecasts are fairly benign, the risks are firmly to the downside
  • Table: Monetary Indicators
  • Fiscal Policy
  • New Budget To Maintain Discipline
  • At the heart of Turkey's economic stability since 2001 has been consistent fiscal prudence Fears of spending
  • overruns throughout this period have been confounded by strong political commitment - abetted
  • by IMF arm-twisting - to the policy, itself a recognition that any significant slippage would trigger an outflow
  • of portfolio capital and a new currency crisis The latest budget broadly follows these principles, and we see
  • only moderate risks to fiscal targets over the medium term, in spite of the electoral cycle
  • Table: Fiscal Accounts, TRYbn
• Chapter 3: Special Report
  • BMI Sovereign Risk Ratings
  • What And Where Are The Risks?
  • Table: BMI Sovereign RIsk Ratings
  • Emerging Europe
  • Diverging Ratings Trends
  • Table: Emerging Europe Sovereign Ratings - Evolution of Ability to Pay
  • Table: Emerging Europe Sovereign Ratings - Evolution of Willingness to Pay
• Chapter 4: Business Environment
  • Executive Summary
  • SWOT Analysis
  • BMI Business Environment Risk Ratings
  • Legal Framework
  • Labour Force
  • Table: Demographic Indicators (2005)
  • Table: Employment Indicators
  • Foreign Investment Policy
  • Table: Middle East & Africa Annual FDI Inflows
  • Table: Turkey Annual FDI Inflows
  • Foreign Trade Regime
  • Table: Top Export Destinations, US$mn
  • Tax Regime
• Chapter 5: Key Sectors
  • Autos
  • Industry Forecast Scenario
  • Table: Turkey Automobile Sector - Historical Data & Forecasts
  • Pharmaceuticals & Healthcare
  • Industry Forecast Scenario
  • Table: Healthcare Expenditure Trends