MILLI RE 2020 ANNUAL REPORT

Activities and Major Developments Related to Activities General Information Financial Rights Provided to the Members of the Governing Body and Senior Executives Research & Development Activities 48 Milli Re Annual Report 2020 The CBRT consolidated its tightening policies in the fourth quarter. Having displayed a supportive stance in the first half of 2020 in response to the weakened economic activity, the CBRT gradually decreased the policy rate that started 2020 at 12% to 8.25% until May, withdrew the measures adopted during the pandemic in phases in the second half of the year, and increased the policy rate to 10.25% in September. Having turned to funding through a single interest rate in line with its simplification policy in November, the CBRT increased its weekly repo rate from 10.25% to 15%. In December, the CBRT consolidated monetary tightening in order to re‑establish the disinflation process in the shortest time possible and brought the policy rate up to the 17% level. It is considered that a stable outlook will be formed in exchange rates in 2021 with the contribution of the CBRT’s tightening monetary policy coupled with global liquidity conditions. Such an outlook would back the balancing of domestic demand by causing an increase in TL savings tendency and might alleviate inflationist pressures. Work is in progress for devising a new financial architecture within the scope of the New Economy Program. Announced in September, covering 2021‑2023 and the government’s medium‑term goals, the New Economy Program (NEP) identified inflation as the principal area of struggle to be addressed. According to the Program’s key targets, a permanent balance will be established in current transactions, and efforts will be ongoing for creating a financial architecture on the basis of financial stability and security through policies that will increase the resilience of the national economy against internal and external shocks. In addition, in order for growth to be sustainable, a new development model will be implemented, which pursues macroeconomic balances and is backed by strategic reforms. The NEP estimates that the Turkish economy will grow 0.3% in 2020, while predicting that it will expand by 5.8% in 2021 and inflation will decline to 8% at year‑end 2021. Economic Outlook Source: TUIK, TCMB, Ministry of Treasury and Finance 3.0 0.9 1.8 2018 2019 2020 GDP Growth Rate - Based on Current Prices (%) 223 203 209 2018 2019 2020 168 172 161 2018 2019 2020 Imports (USD billion) Exports (USD billion) The growth of the Turkish economy that outperformed the projections in 2020 might lose pace in the first quarter of 2021 due to tightened financial circumstances and increased measures.