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İŞBANK
ANNUAL REPORT 2014
10
CHAIRMAN’S
MESSAGE
Economic growth in developing countries
remained at low levels compared to
the recovery phase in the aftermath
of the global crisis. Another important
development in 2014 was the increase in
geopolitical risks that occurred in locations
such as Ukraine, Syria, Libya and Iraq; all
located in the vicinity of our country.
In 2015, downside risks related to the
global economy are expected to be at
the forefront. One of the most critical
issues that will shape global financial
markets is the timing and pace of the
Fed’s interest rate increases. On the
other hand, continuation of expansionary
monetary policies by the central banks in
the Eurozone and Japan is a possible factor
that can, to some extent, counteract the
tightening in global liquidity that can be
caused by the Fed’s actions.
2015 will be a challenging year for
Turkey’s economy.
While domestic demand has been losing
acceleration as a result of macro-prudential
measures implemented in 2014 in Turkey,
the highest contribution to economic
growth came from net exports, particularly
those to the European Union. This
situation, in turn, resulted in a significant
contraction in the current account deficit,
the main weakness of the Turkish economy.
In 2014, while portfolio investments from
overseas continued, both the financial and
the real sectors have continued to borrow
from foreign markets without difficulty.
Esteemed Stakeholders,
We left behind a year that saw lower
than expected global economic
activity and widely varying growth
performances between the countries.
Among the developed economies, the
US economy in particular shook off the
impact of the global crisis to a large extent
and achieved solid growth. As a result of
improvements posted in the labor and
housing markets in line with the economic
recovery, the US Federal Reserve (Fed)
tapered the monthly asset purchase
program it had started in the aftermath of
the financial crisis, stopping it completely in
October 2014.
As the conditions for an interest rate hike
by the Fed begin to emerge, the US Dollar
significantly appreciated in international
markets, which caused fluctuations in
capital inflows to emerging markets.
Meanwhile, the appreciation of the US
Dollar coupled with weak global economic
activity resulted in a substantial decline
in commodity prices. In particular, the
downward trend in the oil prices, which
came into focus in the last quarter of the
year, reached such an extent as to change
the balance of the global economy. Net
energy importing countries, including
Turkey, are expected to experience a
positive impact due to this situation.
For Turkey’s economy, 2015 will likely be
a year that should be managed properly.
Given the forecasts for our largest export
markets, namely the European Union
and Iraq, net exports are expected to
contribute to growth less in 2015 than
2014. Therefore, any expansion in the
Turkish economy is likely to be fueled
mainly from domestic demand in 2015.
However, despite ongoing problems in
Turkey’s export markets, if the low oil price
environment becomes permanent, upward
pressure on the current account deficit is
not expected.
The Turkish economy should be managed
in a way that increases competitive power
in production, value added, employment
and productivity; ensures ongoing
political stability; and adopts domestic
and international policies based on
sustainability.
The Turkish banking sector maintains
a sound outlook.
In 2014, Turkey’s banking sector continued
to achieve controlled growth. Slowing
domestic demand led to a deceleration
in the expansion of the banking sector in
2014. While the measures taken to curb
retail loans squeezed the overall loan
volume, credit growth stemmed from
the increase in corporate and commercial
loans. The banking sector has continued
to meet its funding needs with domestic
and foreign securities issues in addition to
deposits, the sector’s main funding source.
Throughout its nearly century-long history, İşbank has
provided major contributions to our country’s financial
sector as well as the development of industry, commerce
and agriculture; it has served as the driver of Turkey’s
economic development.