The Covid-19 virus emerged in 2020 and later spread around the world. The negative effects of the Covid-19 pandemic on social life receded in the last quarter of the year; however, its effects on the global economy still continue. Problems experienced in the supply chain due to the pandemic have caused bottlenecks in the supply of many raw materials and intermediary goods. Prices of many commodities, especially oil, have risen significantly.

The Omicron variant, which emerged in the last quarter of the year, increased the transmissibility of the virus, but also reduced its intensity. This has raised expectations that the impact of the virus on human health will prove to be relatively limited with the emergence of new variants in the coming period.

The US economy was one of economies to be hit hardest by the pandemic last year. However, the US economy continued to recover during 2021 and the labor market rapidly improved. Noting the spike in inflation driven by both supply and demand, the FED changed course in its monetary policy and signaled that it would start increasing interest rates in the year ahead while winding down its bond purchase program. The Fed’s announcement precipitated a rise in the US dollar against the currencies of developed and developing countries. Attention will focus on how the monetary policy to be implemented by the FED in the coming period will affect the US economy and, in particular, the economies of developing countries.

The Covid-19 pandemic has had a far-reaching impact on Europe. Although the European economy staged a recovery during the year, growth rates on the continent were sub-par. The European Central Bank (ECB) declared that spike in inflation would prove a temporary phenomenon. However, it also warned that if countries were late to take measures, the high course of inflation would pose a risk to the European economy. The problems experienced, especially due to supply chains, started to be keenly felt in industries such as automotive and energy and, in particular, the retail sector. The recovery of the European fell short of the recovery seen in the US economy, resulting in gains for the US dollar in the international market, while the single European currency, the Euro, saw losses against the US dollar during this process. European exporters, such as Germany, are expected to benefit from this situation.

ALTHOUGH THE NEGATIVE EFFECTS OF COVID-19 ON SOCIAL LIFE EASED IN THE LAST QUARTER OF THIS YEAR, IT’S IMPACT ON THE GLOBAL ECONOMY CONTINUES.

The negative effects of the Covid-19 virus, which emerged in 2020, on the economy and social life in Turkey started to ease this year. Successful management of the vaccination process and sound organization of the healthcare system limited the fallout of the pandemic on our country.

During the second half of the year, the number of Covid-19 cases decreased in Turkey, while there was a gradual return to normality in economic and social life. The partial easing of restrictions on international flights also helped to reduce the negative effect of the pandemic on Turkey’s tourism sector in the peak summer season.

Moreover, the wheels of the economy started to turn more rapidly with the removal of restrictions during the second half of the year, paving the way for significant export growth. Growth rates rapidly gained momentum with the contribution of base effect. Turkey is set to take its place as one of the three fastest growing countries in the G-20.

Ziraat Participation worked to the strategic priorities of disbursing the resources it obtains domestically and from abroad in a manner most beneficial to the Turkish economy, and contributing to the increase of the share of participation banking in Turkey’s financial sector. The asset volume of the participation banking sector had increased by 64% YoY as of the end of 2021, outperforming the 51% growth in the asset volume of the overall banking sector in the same period. Our Bank’s asset volume grew by 63% in the same period. In terms of profitability, the net profit for the period in the participation banking sector expanded by 53% YoY in 2021, comparing with the 57% increase observed in the banking sector as a whole over the same period. Meanwhile, the share of participation banking in the overall banking sector edged up from 7.15% at the end of 2020 to 7.78% at the end of 2021. The continuation of this positive performance achieved in participation banking will contribute to the deepening of the Turkish financial system and rendering it more resilient to risks.

Ziraat Participation is Turkey’s first state-owned participation bank. Ziraat Participation continued its branching process in 2021 despite the pandemic, and is proud to have opened its 121st branch. Ziraat Participation aims to transfer the practice of state-owned participation banking to all residential areas with a high level of economic activity by accelerating its branch expansion in the coming period. Our Bank continued to provide effective services by offering its customers the relevant products in line with their needs during the period, when economic activity gained pace compared to the previous year.

Since its establishment, our Bank has continued to work with dedication to contribute to participation banking, increase its support to the Turkish economy and generate more added value. Ziraat Participation will continue to work to contribute more to our economy in the coming periods.

On behalf of myself and our Board of Directors, I would like to thank our employees for their devoted performance in the challenging conditions in 2021, our customers for their confidence in our Bank, our business partners and correspondents who are always there for us.