- SABANCI HOLDING CHAIRMAN GÜLER SABANCI'S EVALUATION OF THE YEAR 2010
- "THE WORLD STARTED TO EMERGE FROM THE CRISIS IN 2010 AND 70 PERCENT OF THIS GROWTH BELONGED TO THE DEVELOPING NATIONS
- "EUROPEAN COUNTRIES HAVE UNDERSTOOD THAT IT IS VERY HARD TO HAVE A COMMON MONETARY POLICY WITHOUT A COMMON FISCAL POLICY"
- "TURKEY'S ECONOMY GREW MUCH MORE STRONGLY THAN EXPECTED DURING 2010. ITS GROWTH RATE COULD EXCEED 8 PERCENT"
- "UNEMPLOYMENT IN TURKEY MAY DECREASE TO 9 PERCENT, BUT THE PROBLEM IS STRUCTURAL, AND CAN NOT BE SOLVED ONLY WITH GROWTH"
- "EXCESSIVE AND SHORT TERM CAPITAL MOVEMENTS SHOULD BE MANAGED. THE DECISIONS OF THE CENTRAL BANK ARE POSITIVE"
- "WE SHOULD INCREASE BOTH INVESTMENT AND SAVINGS WHILE WE ARE GROWING RAPIDLY"
- "WHILE THE ECONOMY IS GOING WELL IT IS IMPORTANT TO CONTINUE A STRICT FISCAL POLICY"
- "WE ARE EXPECTING TURKEY'S CREDIT RATING TO BE UPGRADED IN 2011"
- "CORRECTLY UNDERSTANDING BOTH THE TRENDS AND THE RISKS IS KEY TO SUCCESS FOR SABANCI"
- "AS SABANCI, WE WILL DO WHAT IT TAKES TO BE THE "SABANCI OF TURKEY": WE WILL INCREASE OUR PROFITABILITY, STRENGTHEN OUR COMPANIES THROUGH LONG TERM INVESTMENTS AND WE WILL CREATE EVEN MORE VALUE"
Sabancı Holding Chairman Güler Sabancı sent her New Year's message to the employees of the Sabancı Group.
In her message, in which she evaluated the year 2010, Sabancı also expressed her expectations from 2011. Güler Sabancı's message is as follows:
2010 was the year we started to emerge from the great financial crisis. Recovery has been better than expected, and it appears that global growth will be around 4.8%.
Most of this growth came from emerging countries, with 70% of it coming from Asia, including Turkey.
It can be seen that this trend in growth is the result of structural changes and disassociations that actually started toward the end of 1980s and came to be more definite and permanent during the last 10 years. National income in the developing nations has been increasing 2 to 3 times faster than that of the developed countries.
However, although there is a divergence between these two groups when looking at the long term growth trends, reciprocal dependency is sustained, particularly in foreign investment flows. The developed countries still represent more than 60% of the world economy.
During 2010, growth figures from all over the world, including Turkey, were achieved only thanks to some extraordinary financial policies.
Monetary policy has become "flexible" in such a way that interest rates have gone down almost everywhere, reaching record levels, particularly in the developed economies. In order to ensure that these developments bear good results, it is crucial for the G-20, of which Turkey is a member, to deliver and work under common policies.
In the developed economies, public debt has reached alarming levels while real economy has failed to reach its pre-crisis levels. Free from incentives, private consumption fails to rise to a level that will ensure the sustainability of growth.
All these elements indicate that the developed economies have not been able to fully recuperate from the impacts of the crisis, and that such a full recuperation will take considerable time. Unemployment problems, which remain unresolved throughout the world, are the clearest indication of this.
The other two issues that remained on the agenda during 2010 were energy safety climate change. For the future of the world, it is essential that we come up with sustainable solutions to both of these issues.
It is clear that they shall remain at the top of the global agenda for years to come. Again, in these areas, the G-20 countries should assume a great deal of responsibility.
The year 2010 has been quite painful for Europe. Some say the European Union has been going through its toughest times since its founding. Although the fears expressed for Euro Zone have been exaggerated, they did emphasize a specific truth: maintaining a common currency is a tough job without common financial policy.
2011 will be a major crossroads for the European Union, and particularly for the Euro Zone. If they are able to realize common and sound financial policies, the European Union will be able to come out of the crisis stronger than ever.
If not, then the potential for an even larger crisis will remain, even if that potential, itself, is small. In case of such a crisis, this will only be resolved by the major nations of Europe, such as Germany, where such a situation would have the greatest impact.
Considering Asia, where developing countries are the majority, 2010 has been a period during which successful growth processes have been established and large scale investments made. Spearheaded by China and India, these countries have been financing their growth processes from their own national resources to a significant degree. While their investment dividends as part of their national income climbed to above 35%, their savings rates climbed even higher. As those nations have come to acquire a current account surplus, instead of current account deficit, they have ceased to be dependent on unstable and short term capital movements.
Although it had contracted by 4.7% during the 2009 year, the Turkish economy has displayed a strong and improving performance during 2010, with a rate of growth that is was much more rapid than expected. A flexible monetary policy as well as the record decreased in the real interest rates are together responsible for a significant part of this strong growth. Further, boosted by corporations and households utilizing the loans that are now being granted on to an increasing degree, the strong increases in domestic demand have also been quite effective in stimulating this process of recuperation. This year growth is estimated to exceed 8%. In any event, if such an estimate proves to be correct, Turkey shall not only attain its pre-crisis GNP figures, but shall easily surpass them. Turkey will come to be regarded as one of the first and very few nations that have been able to do so.
Growth is Turkey is dependent on domestic demand to a very large extent. When sustainable international growth comes to be attained again on a larger scale, Turkey will then be rewarded with even further benefits.
The strong domestic demand supported growth decreased the country's unemployment rate to 11% during 2010, from a high of 16.1% in 2009. As I frequently mention, unemployment in Turkey is not related only to growth, it is substantially a structural issue. Despite the possibility of these levels decreasing to 9 or 9.5%, unemployment in Turkey is not a problem that can be solved only through growth.
In terms of investment and its savings rate, Turkey is similar to Latin America, not Asia.
As a country, we have a potential for rapid growth and, as a matter of fact, we do need this. However, in order to have a steady or rapid growth we need to increase investment dividends as part of the national income, and we need to increase our national savings rate.
It is clear that such increases can be achieved in both areas. In the private sector, creating more domestic resources and directing our profits towards long term investments will strengthen our corporations and ensure that Turkey is rewarded with both constant and rapid growth.
A certain amount of external resources are needed for Turkey to make investments it requires. It is natural that Turkey is a net importer of capital and as a result of it having to run a current account deficit. Our target is to keep this deficit at a reasonable level and to finance it through long term foreign investments.
As a consequence of the money policies of the developed countries, especially the USA, capital "escaping" from the many very low interest environments is flowing increasingly to the developing countries.
These excessive and short term investment flows should be managed and restrained. Otherwise our interest rates, our competitiveness, our employment levels and the stability of our prices will all be negatively impacted. To this end, the decisions made by the Central Bank in the recent weeks constitute very positive steps, including the decreases set in the bank rates.
Experience in the world has shown us that while everything is fine in an economy it is important to sustain a tight financial policy. As the importance of a tight financial policy increases even more, in time the money policy instead has to ease off to some extent, in accordance with state of the world. Long term, consistent growth can only be accomplished this way. Thus, the challenge of Turkey's financial policy at the beginning of 2011 is mainly this important duty.
For Turkey, 2011 will be the year of the general election. In addition, if a slowdown occurs in the fundamental economy, accompanied by increase in stock levels, these can be seen as factors that will slow down the rate of increase in oil and commodity prices throughout the world. Maybe the most important point to consider here is that we should make no compromises in the principles of a Market economy. We know and can see that the requirement for a healthy market economy will remain.
Nevertheless, the growth of the economy during 2011 is expected to be around 5%. We also expect inflation to be around 6 to 6.5%.
The meaning of this positive progress in the Turkish economy for investors is that "risks" are decreasing, or are in the process of decreasing. The attraction of our country has increased in both the middle and the long term in terms of investment. As a result of this, we expect the credit rating institutions to reflect this in the ratings that they apply to Turkey during 2011 and to very soon increase our rating level.
Following the referendum in 2010, I mentioned that we needed to listen to each other more attentively, embrace our diversities with tolerance, appreciate each other's values, and to work harder in our collaborations. These will become even more important during 2011 as we will approach and then pass through our general election. It is of vital importance for all of us to go though these elections, which should be feasts of democracy, easily and in social peace.
In 2010 Turkey had a say in many important matters, not only in its own region but throughout the the world. In 2011 Turkey will continue to have say in world affairs as a G-20 member.
In 2011, even if our membership negotiations do not proceed as we wish, we will continue to work with the European Union, independent of our membership process, on many important tasks, such as for the energy safety of Europe.
As Sabancı Holding, we are Turkey's most prominent and respected group. We are Turkey's largest group in terms of net assets with our 122.5 billion TL.
During the recent crisis, we stated that success was our responsibility. We accomplished and satisfied this responsibility through your devoted work. During 2010 we maintained our growth and profitability through our productive processes, and we accomplished successful outcomes in each of our active businesses.
For Sabancı's leadership team, interpreting trends and risks well, making the right decisions in a timely manner, and proceeding on the correct course of action will remain the key to our success. In 2011, with the contributions of each of you - our most valued resource - our objective is to improve further our estimation of trends and risks, to be more competitive and productivity focused in our current businesses, and to create sustainable value for each of our stakeholders.
Sustainability will come to be our most important consideration for the world. We will do what it takes to be "Sabancı of Turkey": accelerating our long term investments; strengthening our companies further; growing more rapidly; and creating more value.
I believe that we will accomplish this through your devoted and successful efforts. I trust you, and I am proud to be working with you.
I wish you a healthy and peaceful new year with your families.