VKF_FRAE_2018_uyg11

22 Section I: Introduction Esteemed Shareholders, 2018 was marked by major developments, such as a positive outlook for economic growth in developed countries, a normalization tendency in developed economies’ monetary policies, protective policies in international trade, downside risks related to global growth, and volatility in the risk appetite for emerging market assets. In 2018, the US economy’s outlook was bright, buoyed by expansionary fiscal policies and expanding 3.4% in the third quarter. The greatest contribution to GDP growth came from consumption expenditure, while net exports contributed its lowest level in 34 years. In 2018, the Federal Reserve (Fed) continued to uplift its policy rate due to ongoing improvement in economic indicators. However, the Fed is unlikely to continue increasing interest rates in 2019. In Europe, uncertainties surrounding Brexit, political instability in some EU member countries, and slowing economic growth are the main risk factors weighing down the region. Leading indicators in the Eurozone pointed to a slowdown in economic activity, with the Europe’s economy expanding just 1.2% year-on-year in 2018. The European Central Bank (ECB) did not change its policy rate at the December meeting. The ECB completed its Quantitative Easing at year-end 2018 and continued to pursue normalization of its monetary policy. Trade wars with the USA and decelerating global growth had an adverse impact on China’s economy in 2018. China’s economic activity lost momentum, with the country registering its weakest growth performance in 28 years with its 6.6% growth which was lower than expected in the third quarter of the year. The Chinese Central Bank and China’s government have taken various measures – such as lowering required reserve ratios, increasing capital controls and boosting USD reserves – to counteract the adverse impact that the trade wars with the US have had on the country’s economy. Turkey’s economy recorded growth of 7.2% in the first quarter and 5.3% in the second quarter, due to an expected slowdown in economic activity. In the third quarter, the Turkish economy expanded 1.6% on an annualized basis despite exposing speculative attacks in the foreign currency markets in August. With the presidential elections held on June 24, political stability was confirmed in our country. Establishment of the Presidential Government System concentrated economic administration in a single office. As a result, quick and decisive action was taken and implemented against speculation-driven attacks that occurred during the third quarter. On September 20, the New Economy Program was announced by the government’s economy administration. The program is based on economic stabilization, accompanied by fiscal discipline and a transformation focused on added value production and exports, for the period 2018-2020. Structural reforms are envisaged to ensure Turkey’s healthy, sustainable and well-balanced growth. 16% Total Deposit Growth Turkey had a successful year despite the difficulties in global markets. MESSAGE FROM THE DEPUTY CHAIRMAN VakıfBank is on your side with all the pride of a state-owned bank...