MILLI_RE_ANNUAL REPORT 2022

Economic Review Raw material shortages and supply- side weaknesses brought on by the release of pandemic-depressed 2021 demand and the surge in inflation that they led to together with the outbreak of war between Russia and Ukraine exerted new and more vigorous upward pressure on energy and commodity prices. War-related sanctions imposed on Russia, one of the biggest players in global commodity and energy markets, sparked an energy crisis that affected the whole world–but especially Europe–with the result that energy and commodity prices took off and reached record-breaking levels. In order to deal with that inflation, the US Federal Reserve Bank, the European Central Bank, and the world’s other leading monetary authorities adopted tight-money stances and boosted lending rates. Initially these measures depressed growth in developing countries but as the impact of war spread throughout the global economy, they began to prompt recession worries in developed countries as well. In the course of 2022, the Fed raised its policy rate by a total of 425 basis points, putting it into the 4.25-4.50% range, the highest witnessed since 2007. From midyear onward, the ECB also began raising its policy rate, bringing it eventually to 2.50%. The Bank of England for its part raised its policy rate by a total of 325 basis points, increasing it to 3.50%, its highest level in fourteen years. In December 2022, US consumer prices fell for the first time since 2020 while the one-month rise in food prices was the lowest seen in the previous 21 months. Both developments strengthened expectations that inflation was now receding. With the cost of energy and food exerting less pressure on producer prices in 2022, twelve- month CPI inflation in the US weighed in at 6.5% in December, below what had been anticipated and less than anything reported since March 2021. The US economy grew by 2.1% in 2022. The main contributors to that growth were continued strong spending among consumers and companies replenishing their stocks. Although the euro area had been expected to suffer a Q4 2022 contraction, in fact its economy grew by 3.5% last year, a performance that was achieved despite the adverse impact of energy made costlier by Russia’s invasion of Ukraine. Twelve-month inflation in the euro area peaked at 10.6% in October, which is the highest rate in the history, fell for the first time in 18 months in November, and ended up at 10% on 31 December 2021. The Having grown by 11.4% in 2021, the Turkish economy achieved a better-than- anticipated performance and grew by 5.6% in 2022. 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 MİLLİ RE 2022 ANNUAL REPORT