According to the Turkish Statistics Institute, the Turkish economy contracted by 4.7% in the year 2009 compared to 2008, well below the year-end projection of around 6%. The figures show that the Turkish economy managed to survive the global crunch without significant injury, partly due to Turkey’s insulated position and the restructuring measures via the banking legislation soon after the domestic financial crisis in 2001.

Turkish banks have little exposure to toxic debt instruments as investments in these areas are restricted by the Turkish banking legislation and banks remain well-capitalised. Looking ahead, economic prospects for 2010 are encouraging albeit at a slower rate.

Likewise, the World Bank’s Country Director for Turkey, Ulrich Zachau, has estimated that in 2010 the Turkish economy will grow by 5%. Zachau points out that the preliminary indicators show that economic recovery in Turkey continued in the first quarter of 2010 and that the Turkish Central Bank’s inflation target ratio of 8.24% is a “realisable target”.

The Banking Regulation and Supervision Agency (“BRSA”) issued a press release on 5 April 2010 regarding the main Turkish banking sector indicators. According to the temporary data sent by banks to the BRSA, the assets of Turkish banking sector as of February 2010 amounted to TRY842,233 million (approximately EUR426,631 million), indicating an increase of 14.8% compared to February 2009. Moreover, profit generated by the banking sector in February 2010 was TRY3,579 million (approximately EUR1,813 million) indicating an increase of 11.6% compared to February 2009 and the sector’s capital adequacy increased to 20.1% from 18.1% in February 2009.