2023 was a year in which the slowdown in global economic growth continued while the threat of a hard landing for economies decreased.
Burhaneddin TANYERİ
Chairman of the Board
Dear stakeholders,
The year 2023 was marked by central banks raising interest rates within the scope of tackling global inflation, with tight monetary policies implemented, while the slowdown in global economic growth continued, geopolitical risks remained very much on the agenda and the possibility of a hard landing for the world’s economies receded.
The spotlight was on inflation in 2023.
Although inflation declined more swiftly than expected in many countries due to the decline in energy and commodity prices, it remained above long-term averages and the targets set out by central banks.
In spite of the tight monetary policy in place in the USA, along with the difficulties affecting some banks and the debt ceiling crisis, economic growth gained momentum when compared to 2022 thanks to the strong course of private consumption expenditures and the labor market.
In the Eurozone economy, a combination of low consumer confidence, the negative effects of high energy prices and weakness in the manufacturing sector and investments served to put the brakes on economic activity throughout the region. In particular, the German economy, Europe’s largest manufacturing industry and export-oriented economy, recorded a contraction - albeit a limited one - in 2023 for the first time since the pandemic in 2020.
Having hiked interest rates in the first three quarters of last year, the US Federal Reserve (Fed) and the European Central Bank (ECB) left interest rates on hold in the last quarter. The Fed may start cutting interest rates in 2024, while the ECB is set to keep interest rates at elevated levels for some time.
Looking towards Asia, the Chinese economy, which leads the region, posted a surprisingly strong recovery in 2023 thanks to the government’s comprehensive monetary and fiscal loosening steps, despite the slowdown in the global economy, the debt problems facing local governments and the ongoing issues surrounding debt in the real estate sector.
The delayed effects of monetary tightening steps implemented within the scope of tackling global inflation and geopolitical risks are expected to put pressure on global economic growth in 2024. Global economic growth is expected to be supported if inflation continues to ease and global central banks start to reduce interest rates.
The Turkish economy demonstrated a strong performance despite the negative geopolitical developments and the devastating earthquakes.
The Turkish economy exhibited a strong growth performance in 2023, despite the challenges facing the global economy and the negative effects of the earthquakes which struck in February. The recovery in net exports and investments along with a buoyant performance in the tourism sector were the main factors supporting growth.
While the improvement in employment became evident by the end of the year, the budget deficit remained within the Maastricht Criteria and the Medium Term Plan (MTP) target, excluding the effects of earthquakes and one-off payments.
We deeply mourn our many fellow citizens and colleagues who lost their lives in the earthquakes that affected 11 provinces. Our bank has provided the necessary contribution to mitigate the negative effects of the earthquakes by implementing the support and facilities needed in this process. We would like to take this opportunity to once again thank our employees, whose voluntary and devoted work in earthquake regions made it possible for our activities to continue uninterrupted.
Our economic authorities continues to tackle inflation with determination through the harmonious monetary and economic policies which they implement, and take steps to ensure that growth reaches a balanced and sustainable structure while directing resources to productive and efficient areas. In this context, gradual increases in interest rates were implemented in monetary policy, with macroprudential regulations simplified and decisions taken on selective credit and quantitative tightening.
International credit rating agencies responded to the effective economic policy with a series of upward revisions in Turkey’s country credit rating outlook, paving the way for significant reductions in the country’s CDS risk premium. In addition, there were significant increases in foreign capital inflows, with an expansion in the CBRT’s reserves.
Ziraat Bank continued to increase the added value it generated for the stable growth of our country in 2023.
Our bank continues to finance the real sector with the resources it provides domestically and abroad, focusing primarily on areas such as production, agriculture and SME financing.
In addition to the delight and honor of celebrating the 100th anniversary of the foundation of the Republic of Turkey in 2023, it has been a great source of pride to have completed our 160th year of operation as a bank. Ziraat Bank is determined to provide effective financial services wherever and whenever it is present, in line with the strategies it has determined, and to generate added value for our country and all our stakeholders.
On behalf of myself and our Board of Directors, I would like to thank all of our stakeholders, especially our employees, who have contributed so valuably to our bank’s successful performance this year.
