MILLIRE 2021 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 44 MİLLİ RE ANNUAL REPORT 2021 ECONOMIC OUTLOOK The global economy embarked upon a recovery process. While global economy started recuperating in 2021 as we started to see relative normalization in pandemic restrictions, economic volatilities and inflationary tendencies grew stronger at the same time. After significantly downsizing in 2020, global economy revived upon termination of restrictions and lockdowns, and consumer demand picked up rapidly. Conversely, goods and services supply failed to keep pace with the increased demand; logistic issues arose, while raw material, commodity and energy prices saw record rises all around the globe. Oil prices were delayed in reproducing the rise in commodity prices due to the downside pressure the pandemic created on global oil demand in conjunction with declined production and shipment. As the Brent oil per barrel price hit the last three years’ highest at USD 86 upon normalization of the economies in 2021, it ended the year at USD 77 per barrel. The price increases were triggered by the depleted stocks as a result of supply cuts by OPEC+ countries and Saudi Arabia. Inflationary pressures threatened developed countries as well. In the US, annual CPI was registered as 7%, marking the highest level since June 1982. Although the PPI in that country indicated at the lowest level since November 2020 with 0.2% on a monthly basis in December, it remained high with its annual value of 9.7%. Although declining somewhat in December when compared to previous months, manufacturing industry and services PMI data in the US demonstrated that the activity persisted in the sectors. Supported by a USD 6 trillion stimulus package during 2021, the US economy recorded its fastest growth since 1984 with an annual rate of 5.7%. In the Euro Zone, inflation indicators gained momentum as a result of the rapid rise in energy and food prices in the last months of the year. Annual CPI was at the highest level in 25 years with 4.9%. In December, consumer confidence index signaled worsening demand conditions in the Euro Zone. Due to the impact of the measures implemented in many European countries for fighting the Omicron variant, services PMI was below the forecasts in December. On the other hand, manufacturing PMI maintained its strong outlook, showing that the positive course on the manufacturing front persisted. As industrial production began increasing in China in the last quarter of the year in connection with the weakened production declines in passenger car, textile and main metal industries, pandemic measures repressed retail sales, painting a negative portrait in relation to demand. Furthermore, China’s export has been losing momentum in parallel with the declined external demand due to lengthened freight durations and increased costs. Notwithstanding, the Chinese economy closed 2021 with a growth rate of 8.1% that outperformed the projections. Tight monetary policies started to be enforced. Having implemented expansionary monetary policies since the onset of the pandemic to help increase liquidity in the market and support economic activity, major central banks tapered their asset purchases and started accelerating the tightening of their supportive monetary policies as concerns regarding inflation remained high. After keeping its monetary policy unchanged and maintaining its policy rate fixed at 0-0.25% in its meetings held during 2021, the US Federal Reserve System (the Fed) curbed its asset purchases in November, after which it doubled the speed of its asset purchase tapering to USD 30 billion a month in its December meeting. It is anticipated that bond purchases will be terminated in March 2022 and at least three rate hikes by 25 bps each will be carried out in 2022. While the European Central Bank (ECB) did not make any changes to its monetary policy by keeping the policy rate at 0% in 2021, it confirmed that purchases within the scope of the EUR 1.85 trillion Pandemic Emergency Purchase Program (PEPP) would be discontinued in March 2022 in the last meeting of the year. The first major central bank in the world to raise the rates after the onset of the pandemic, the Bank of England (BoE) increased the rates in its December meeting after a three- year break and raised its policy rate from 0.1% to 0.25%. Taking into consideration the possible pressure of supply- side issues such as semi-conductor/chip crisis and lack of containers in ports on supply chains and trade, and the uncertainties arising from the new variant, the World Trade Organization (WTO) estimates global goods trade to grow by 10.8% in 2021 and 4.7% following year.