14 İşbank
Annual Report 2015
In 2015, the global economy lost
momentum.
While the Chinese economy slowed during
the year, commodity prices also continued
to fall. Moreover, geopolitical risks also
increased. In the last month of the year,
the US Federal Reserve (Fed) increased the
policy interest rate for the first time in nine
years. In this environment, the US Dollar
showed a tendency to become stronger
in international markets, while capital
flows into developing countries including
Turkey weakened. An economic slowdown
was experienced due to less supportive
global environment for emerging countries
compared to the previous years together
with the country-specific problems. On
the other hand, the recovery in advanced
economies continued to move forward.
In light of these developments, the global
economy experienced a relative slowdown
in 2015, compared to the prior year.
Recovery in the US economy led to an
interest rate hike.
In parallel to the recovery in the US market,
the Fed gradually terminated its asset
purchase program in 2014 and signaled
within 2015 that it might increase interest
rates. However, uncertainties with regard
to the timing of the Fed’s first interest
rate hike continued throughout the year.
At first, the expectation was that the Fed
would begin to raise rates toward the
middle of the year. However, following the
unfavorable weather conditions prevailing
in the first quarter that led to a slowdown
in growth, the hike was postponed to
September. Then, in the summer months,
in parallel to developments in emerging
markets, most notably China, concerns with
regard to global growth increased and the
time was still not ripe for the Fed’s interest
rate rise. Therefore, the expectation of a
rate increase in December became more
prevalent. As the general economic outlook
in the US was strong enough to justify
raising interest rates, the Fed decided to
lift the benchmark rate by 25 basis points
in December 2015, for the first time since
June 2006.
The Global Economy
While the recovery trend in developed economies
continued throughout 2015, economic activity in
emerging markets slowed down.
0.25%
In December 2015, the Fed
increased the policy interest
rate by 25 basis points, the first
rate hike since June 2006.
