Making Cooperation Work COMCEC STRATEGY › ... › 2016 › 03 › Presentation-1-3.pdf · Making Cooperation Work Recent Developments China Lowering economic growth Faster than

Utku ŞEN

Making Cooperation Work

For Building an Interdependent Islamic World

COMCEC

FINANCIAL OUTLOOK

COMCEC STRATEGY

6th Meeting of COMCEC Financial Cooperation Working Group

March 17th, 2016

Ankara, Turkey

2 For Building an Interdependent Islamic World

COMCEC STRATEGY Making Cooperation Work

OUTLINE

Recent Developments

Financial Outlook



RECENT

DEVELOPMENTS



Recent Developments

Gradual slowdown and rebalancing of economic

activity in China

Gradual tightening monetary policies in US as other

major central banks continue to ease monetary

policies

Lower energy and commodity prices



Recent Developments

United States

Recovery in the US is

stronger than expected.

Unemployment is back

below 5% for the first time

since 2008.

Fed raised interest rate 25

bps at the end of the 2015.

Source: IMF, U.S. Bureau of Labor Statistics

4%

5%

6%

7%

8%

9%

10%

11%

Unemployment Rate

2,6% 2,8% 2,8%

0,0%

1,0%

2,0%

3,0%

4,0%

2015 2016 2017

GDP Growth Rate



Recent Developments China

Lowering economic growth

Faster than expected slowdown in

imports and exports. In February,

exports felt by 25.4%.

Weaker investment and

manufacturing activity

Sliding trend in Shanghai Stock

Exchange around 20% YTD 2500300035004000450050005500

Shanghai Stock Exchange

5,0%

5,5%

6,0%

6,5%

7,0%

7,5%

2014 2015 2016 2017

GDP Growth Rate

Source: IMF, Quandl



Recent Developments

Euro Area

Monetary easing continues

ECB cut the Eurozone interest rate to

zero in March 2016.

Despite the monetary easing by ECB,

inflation still in an irregular path

Credit conditions are improving and

credit demand is picking up

Government debt, unemployment and

low nominal growth remain downside

risks

Source: Eurostat

-0,8%

-0,6%

-0,4%

-0,2%

0,0%

0,2%

0,4%

Euro Area Inflation Rate

2,0 € 2,2 € 2,4 € 2,6 € 2,8 € 3,0 €

ECB Balance Sheet (Tn.)



Recent Developments Emerging Markets

Vulnerabilities remain elevated, risk

appetite has fallen, and market liquidity

risks are higher.

sensitivity to a tightening of global

financial conditions.

nonperforming loans are set to rise as

corporate earnings and asset quality

deteriorate

Economic growth is projected to

decline.

Source: IMF, FRED

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

$120

Crude Oil

0,0%

2,0%

4,0%

6,0%

8,0%

GDP Growth Rate



Recent Developments

Source: IMF Database

1,9% 2,1% 2,1%

1,5% 1,7% 1,7%

2,5%

4,5%

5,3%

0%

1%

2%

3%

4%

5%

6%

2015 2016 2017

GDP Growth Rates

Advanced Economies Euro area OIC World



FINANCIAL OUTLOOK

OF OIC MEMBER

COUNTRIES

10



FINANCIAL DEPTH

• Measures the size of financial institutions and markets

FINANCIAL ACCESS

• Measures to the degree to which individuals can use financial institutions and markets

FINANCIAL EFFICIENCY

• Measures the efficiency of financial institutions and markets in providing financial services

FINANCIAL STABILITY

• Measures the stability of financial institutions and markets



Selected Financial Data

Indicators

DEPTH

Domestic credit to private sector by banks (% of GDP)

Market capitalization to GDP

Stocks Traded, Total Value (% of GDP)

ACCESS Bank account per 1,000 adults

Number of bank branches per 100,000 adults

EFFICIENCY Bank Return on Asset (ROA)

Bank Return on Equity (ROE)

STABILITY Bank Nonperforming Loans to Total Loans

Regulatory Capital to Risk-Weighted Assets

Source: World Bank



Categorization of COMCEC Member States

Categories Countries Number of

Countries

OIC-Low income group

US$ 1045 or less (LIG)

Afghanistan, Benin, Burkina Faso, Chad, Comoros, The

Gambia, Guinea, Guinea Bissau, Mali, Mozambique, Niger,

Sierra Leone, Somalia, Togo, Uganda

15

OIC-Lower middle income

group

US$ 1,046 to US$ 4,125

(LMIG)

Bangladesh, Cameroon, Côte d'Ivoire, Djibouti, Egypt,

Guyana, Indonesia, Kyrgyz Republic, Mauritania, Morocco,

Nigeria, Pakistan, State of Palestine, Senegal, Sudan, Syria,

Tajikistan, Uzbekistan, Yemen

19

OIC-Upper middle income

US$ 4,126 to US$12,735

(UMIG)

Albania, Algeria, Azerbaijan, Gabon, Islamic Republic of Iran,

Iraq, Jordan, Kazakhstan, Lebanon, Libya, Malaysia,

Maldives, Suriname, Tunisia, Turkey, Turkmenistan

16

OIC-High income group

US$ 12,736 or more

(HIGH)

Bahrain, Brunei Darussalam, Kuwait, Oman, Qatar, Saudi

Arabia, United Arab Emirates 7

Source: World Bank



FINANCIAL DEPTH

FINANCIAL ACCESS


FINANCIAL STABILITY



FINANCIAL DEPTH

1 • Domestic credit to private

sector by banks (% of GDP)

2 • Market capitalization to

GDP ratio

3 • Stocks Traded, Total Value

(% of GDP)



Domestic Credit to Private Sector by Banks (% of

GDP)

Source: World Bank

0%

10%

20%

30%

40%

50%

60%

70%

OIC LIG OIC LMIG OIC UMIG OIC HIGH OIC Average Rest of World

2012

2013

2014



Market Capitalization to GDP Ratio

Source: World Bank

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OIC LMIG OIC UMIG OIC HIGH OIC Average Rest of World

2012

2013

2014



Stocks Traded, Total Value (% of GDP)

Source: World Bank

0%

10%

20%

30%

40%

50%

60%

OIC LMIG OIC UMIG OIC HIGH OIC Average Rest of World

2012

2013

2014



FINANCIAL DEPTH

FINANCIAL ACCESS


FINANCIAL STABILITY



FINANCIAL ACCESS

1 • Bank account per 1,000

adults

2 • Bank Branches per

100,000 adults



Bank Account Per 1,000 Adults

Source: World Bank

0

200

400

600

800

1.000

1.200


2012

2013

2014



Bank Branches per 100,000 adults

Source: World Bank

0

5

10

15

20

25

30


2012

2013

2014



FINANCIAL DEPTH

FINANCIAL ACCESS


FINANCIAL STABILITY




1 • Bank Return on Asset

(ROA)

2 • Bank Return on Equity

(ROE)



Bank Return on Asset (ROA)

Source: World Bank

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%


2012

2013

2014



Bank Return on Equity (ROE)

Source: World Bank

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%


2012

2013

2014



FINANCIAL DEPTH

FINANCIAL ACCESS


FINANCIAL STABILITY



FINANCIAL STABILITY

1 • Bank Nonperforming Loans to

Total Loans

2 • Regulatory Capital to Risk-

Weighted Assets



Bank Nonperforming Loans to Total Loans

Source: World Bank

0%

2%

4%

6%

8%

10%

12%


2013

2014

2015



Regulatory Capital to Risk-Weighted Assets

Source: World Bank

0%

5%

10%

15%

20%

25%


2012

2013

2014



Overall Assessment for OIC Member States

Inclusive growth policies can be implemented with comprehensive financial sector strategies including Islamic Finance strategies

Effective financial markets can help channeling global

funds to the real sector in OIC Member States

There is significant potential of financial inclusion. As a pillar of this, easing access to finance is critical for further development

Considering the volatility and uncertainty in the global markets, contingency plans are important for risk management

Thank You

Making Cooperation Work

For Building an Interdependent Islamic World COMCEC STRATEGY

6th Meeting of COMCEC Financial Cooperation Working Group

March 17th, 2016

Ankara, Turkey

Documents

Making Cooperation Work COMCEC STRATEGY › ... › 2016 › 03 › Presentation-1-3.pdf · Making Cooperation Work Recent Developments China Lowering economic growth Faster than