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ACTIVITIES
İŞBANK
ANNUAL REPORT 2014
15
Economic growth in emerging
markets lost momentum in 2014.
In 2014, geopolitical issues such as the
conflicts in the Middle East and tensions
between Russia and Ukraine which are
at the forefront, led to a deterioration of
the risk perception of emerging markets.
Economic growth in developing countries,
which were already adversely affected by
weak economic activity in the developed
countries, came in lower than expected.
The fluctuations in capital flows to
emerging markets in the last quarter of
2014 due to strengthening expectations
of a U.S. interest rate hike in 2015, led to
depreciation in local currencies of these
countries against the U.S. Dollar.
The world economy experienced a
rapid decline in oil prices.
Weak economic activity in Eurozone, a
tendency in Chinese economy to slow
down and economic stagnation in Japan
pointed to a decrease in global oil demand.
In addition, the continuance of the increase
in oil production with new technologies
developed in the U.S. resulted in a rapid
decline in oil prices beginning in June.
Oil prices in the second half of the year
declined by almost 50%.
Future Outlook
The most important item on the global
economic agenda in 2015 is expected to be
the normalizing process of Fed’s monetary
policy. The Fed’s start to implement interest
rate rises in parallel with the economic
recovery is expected to cause fluctuations
in capital flows to emerging economies in
particular. This indicates that the moderate
growth in developing countries, including
Turkey, which as a group had become the
locomotive of the world economy after the
global crisis, will continue in 2015. On the
other hand, under the assumption that the
economic recovery in the Eurozone will
take place very slowly, the expansionary
monetary policies implemented by the
ECB are expected to continue for some
time. Likewise in Japan, which is fighting
against deflation, the monetary policies
to support economic activity are expected
to continue in the coming period. These
policies are expected to somewhat
compensate the negative impact of the
Fed’s interest rate rising on global liquidity
conditions. In addition, recovery of the U.S.
economy is likely to be positively reflected
in emerging markets through foreign trade.
Continuation of the current low level of oil
prices in the coming periods is expected
to support growth in net energy importer
countries such as Turkey. However,
oil-exporting countries will be adversely
affected by this situation.
The most important item on
the global economic agenda
in 2015 is expected to be
the normalization process
of Fed’s monetary policy.