IN 2019, THE BUDGET DEFICIT HAS BEEN MAINTAINED BELOW THE MAASTRICHT CRITERIA WHILE ECONOMIC ACTIVITY HAS KEPT BEING SUPPORTED THROUGH FISCAL MEASURES AND INCENTIVES.

Distinguished stakeholders,

Despite the initially fluctuating progress, 2019 has been recorded as a year in the last quarter of which important uncertainties such as Brexit and the ongoing trade agreement between USA and China have been partially resolved. Even though the commercial tension between USA and China has eased up to a point, the fact that creating a solution for structural differences has been left to the future causes uncertainties to continue albeit in a less intense way. Along with these developments, it can be seen that, through supportive measures, central banks tend to contribute to efforts of lowering the negative effects a possible global economic slowdown might cause.

The FED which cut rates three times during 2019 is first and foremost expected to monitor the reflection of rate cuts on the economy and due to the fact that the desired growth and inflation levels still have not been reached, a preference for fiscal measures is expected in the Euro Zone rather than further deepening current negative rates. The Bank of England, on the other hand, which is struggling with problems that come with Brexit, is expected to support its economy with rate cuts this year.

Led by emerging economies, global economy which saw the lowest growth rates of the last ten years in 2019 is expected to achieve recovery without inflation. Geopolitical risks, Political risk in Europe and USA presidential elections will probably lead central banks to maintain their expansionist stances this year as well, with additional economic support from governments through fiscal incentives. All of which will reflect positively on developing economies by ensuring continuous capital flows.

For the Turkish economy, 2019 has been a period where financial volatility, risk premiums, local and foreign borrowing costs have considerably declined and fragility has been reduced by lower inflation and better current account balance. Monetary policy has kept supporting the economy through strong rate cuts last year and positive outcomes of the economic rebalancing have been started to be observed. As a result of that, international institutions have positively revised their growth expectations for Turkey and Fitch Ratings increased our credit outlook. Rating increase is expected to be considered with continuing fiscal discipline and recovery in our risk premium indicators.

In 2019, the budget deficit has been maintained below the Maastricht criteria while economic activity has kept being supported through fiscal measures and incentives. In 2020, fiscal and monetary policies are expected to be implemented in a coordinated way which will keep supporting disinflation and growth. With the distance covered in terms of inflation and current account balance and contribution of the low base, potential growth rate is expected to be reached very quickly.

Aware of the fact that banks are one of the most important factors which affect economic performance and the sense of responsibility that comes with it, Ziraat Bank, in line with its strategy of contributing to economic growth, increased its loans much faster compared to the sector and did so through TL loans. Loans have been selectively extended to areas which experience difficulties in terms of access to finance but highly contribute to economic growth, the current account balance and production. In order to promote TL savings, Ziraat Bank designed and offered special deposit products for its customers.

As the leading bank of our country, Ziraat Bank will maintain its selective credit policy and keep on contributing to our economy in the coming periods as well.

DR. AHMET GENÇ
Chairman of the Board