THE ANNUAL RISE IN CPI,
AT 9.2% IN SEPTEMBER
2012, DECLINED TO 6.2%
AS OF DECEMBER 2012.
PRESERVING BUDGETARY DISCIPLINE
REMAINS IMPORTANT.
The central government budget replicated
its strong performance of 2011 in the first
half of 2012. In the second half of the year,
however, rising tax revenues lost pace in
parallel with weakened domestic demand,
while non-interest expenditures rose. As a
consequence, in order to sustain budgetary
discipline, in September and October,
increases went into effect for the excise
tax rates applied to motor vehicles, lump-
sum tax amounts on fuel oil and alcoholic
beverages, title deed charges, and gas and
electricity prices.
DECLINE IN INFLATION
The accumulated effects of the rise in
energy prices in the last months of 2011
and the rapid depreciation of the Turkish
lira exerted an upward pressure on CPI,
particularly in the first half of 2012.
Although the annual rise in CPI maintained
its high level in the period that followed,
there was a common expectation that the
decline in inflation would become more
marked in the last quarter of the year due to
weak domestic demand conditions, coupled
with the base effect. Hence, the annual rise
in CPI, at 9.2% in September 2012, declined
to 6.2% as of December 2012.
A CREDIT RATING POINTING AT
INVESTMENT GRADE
In November, Fitch upgraded Turkey’s
long-term credit rating from BB+ to BBB-,
investment grade, and announced the
outlook on the credit rating as “stable”. The
rating agency cited reduced short-term
macrofinancial risks, declining government
debt burden, a sound banking system,
favorable medium-term growth prospects
and a relatively wealthy and diverse
economy as factors in the upgraded rating.
This marked the first time in 18 years that
a credit rating agency upgraded Turkey’s
credit rating to investment grade.
GDP - SECTORAL GROWTH RATES (%)
2011
Construction
GDP
Agriculture
Industry
Services
2012
(*)
Construction
GDP
Agriculture
Industry
Services
0
4
8
12
16
(*)
January-September 2012
INTRODUCTION
ACTIVITIES
CORPORATE GOVERNANCE
FINANCIAL INFORMATION AND RISK MANAGEMENT
23
İŞBANK
ANNUAL REPORT 2012
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