VKF_FRAE_2017

35 VakıfBank Annual Report 2017 INFLATION (%) USA Euro Zone China Japan 1.3 1.8 0.2 2 1.1 2.3 -0.1 0.1 -1 0 1 2 3 2016 2017 (*) Source: IMF (*) Estimated by IMF. The British general elections normally scheduled for 2020 was brought forward to June 2017 after the Prime Minister Theresa May called snap elections in April and received the parliament’s approval. Although Theresa May had thought that snap elections would allow her to increase her majority in the House of Commons, the lower chamber of the parliament, and thus strengthen her hand during the Brexit talks with the EU, the elections did not yield the results she expected. The Conservative Party did become the first party at the ballot box, however, failed to achieve a majority at the parliament. As for Germany, Chancellor Angela Merkel’s Christian democrat CDU party won the general elections of September. However, CDU lost some votes compared to the elections of four years ago and failed to establish the coalition it desired. The coalition talks in Germany started on October 18 and lasted 4.5 weeks; however, after the Free Democratic Party abandoned the talks, it became impossible to create the so-called “Jamaica Coalition”. This development in the largest European economy points to possible early elections. »» OIL PRICES CONTINUED TO HEAD UP. One of the most important developments affecting oil prices in 2017 was OPEC’s decision at its Vienna meeting to extend the deadline of its oil production cuts from March 2018 until end-2018. The US crude oil prices which started to rise from September onwards, closed the year 2017 with a 12.5% increase over the prior year, reaching their highest level since June 2015 that is USD 60.42 per barrel. On top of OPEC’s oil production cuts, the turmoil and geopolitical risks in Northern Iraq, and hurricanes in the USA were key factors driving the oil price up. In addition, the Forties Oil Pipeline in the North Sea was shut down for repairs in December, adding further momentum to the oil price hike. On the other hand, the continued US oil production had a somewhat limiting effect on further increases in oil prices. The US crude oil prices are expected to continue to rise in 2018 due to ongoing supply side constraints. In the major EU economies of France, Germany and the UK, the political agenda left its stamp on the year 2017. The US crude oil prices started to rise from September onwards, and closed the year 2017 at USD 60.42 per barrel.