MILLIRE_2019_Annual Report

Milli Re Annual Report 2019 13 Activities and Major Developments Related to Activities Financial Status Risks and Assessment of the Governing Body Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon Consolidated Financial Statements Together with Independent Auditors’ Report Thereon General Information Financial Rights Provided to the Members of the Governing Body and Senior Executives Research & Development Activities The slowdown trend observed in the global economic activity starting in the second quarter of 2018 prevailed in 2019 as well; triggered by the protective measures taken, global trade volume fluctuated throughout the year and IMF forecasted the global economic 2019 growth rate as 2.9%, which was recorded as 3.8% in the previous year. While the trade tensions between US and China continued throughout 2019, signing of the “Phase One” trade deal at the beginning of 2020 as a result of the ongoing negotiations between the two countries have risen the expectations that the economic uncertainty in developed and emerging countries would disappear. Attempts for the deposition of the US President, Fed’s decision by pursuing an expansionary policy to cut interest rates thrice after a long time, and the debates on regulations for personal data and technology stood out as the major topics which impacted the global markets. Even though the ambiguities caused by Brexit in the European Union were relatively cleared up in the aftermath of the UK elections, economic slowdown, which has been deepening with the negative impact of the global outlook and the demographical issues drew attention. Moreover, along with Fed, European Central Bank’s (ECB) pursuing loose monetary policies as well as its decision to cut interest rates supported the market recoveries in developed countries, and gave rise to the expectation that, even though it would be limited, the global growth would gain some momentum in 2020. While geopolitical risks caused fluctuations in the capital flows as well as giving rise to some concerns arising from the protectionist trade policies; it is noticed that the central banks in China, India, Brazil, Russia and Turkey opted for interest rate reductions in order to boost economical activity. In line with the positive expectations for 2020, the opinions got stronger that the expansionary monetary policies would remain in effect and have a positive impact on the global liquidity conditions as well as support the economy by directing capital flows to emerging countries. 2019 was a year with a very dynamic agenda for Turkey. Local elections held in March, Operation Peace Spring, rising tension in the Eastern Mediterranean, US discourses on possible economic sanctions and the Central Bank of Republic of Turkey’s (CBRT) interest rate reduction decisions, taken one after another, were the major political and economical developments affecting the course of the markets. After contracting by 2.3% and 1.6% respectively in the first two quarters of 2019, with the impact of the positive track of the consumer expenditures, Turkey’s economy achieved 0.9% growth by the end of the year. Following the interest rate reduction decisions taken by the CBRT starting in July, economic recovery gained some momentum in the last quarter of the year. In addition to the decline in oil prices, with the contribution of tourism income and decrease in the domestic demand, based on 2019 cumulative data, Turkey’s current account posted surplus. Increasing by 26% compared to the previous year, Milli Re’s premium production reached TL 1,659 million in 2019. 26%