Governor Yılmaz's Speech for the 78th Ordinary Meeting of the General Assembly (Ankara, 20/04/2010)

• Esteemed Shareholders, Distinguished Guests and Members of the Press, Welcome to the 78th Ordinary Meeting of the General Assembly of the Central Bank of the Republic of Turkey.
• I would like to start my speech with a brief evaluation of the global financial crisis that deepened to spread over the whole world in the final quarter of 2008 and took its toll throughout 2009. Later on, I will summarize the key macroeconomic developments that took place in Turkey in 2009. Finally, I will share my evaluations pertaining to inflation developments and monetary policy implementations.

Distinguished Guests,

• The effects of the financial crisis, which first started in advanced countries and deepened mainly due to the bankruptcy of some major financial firms in the USA in September 2008, continued to dominate financial markets throughout 2009. Accordingly, growth rates slumped globally but particularly in advanced countries. Owing to extensive liquidity operations led by central banks and large-scale government interventions, the effects of the crisis started to subside as of the second half of 2009 and the global economy exhibited signs of a slow and gradual recovery.
• The recovery in global economic activity that started on the back of the historically large fiscal stimulus packages launched by advanced economies contributed to the improvement of global risk perceptions and normalization of financial markets. Readings on economic activity and global financial system in the first quarter of 2010 point out that the recovery is ongoing. However, soaring budget deficits ―especially in advanced economies― reach levels of concern, problems across credit markets linger, and unemployment rates continue to remain elevated, all suggesting that it would take a long time for the global economic problems to be resolved permanently. Moreover, ongoing uncertainties regarding the exit strategies from unconventional monetary and fiscal measures continue to pose risks on the sustainability of the recovery.
• It is observed that advanced and emerging market economies started to recover as of the second quarter of 2009, mainly on the back of expansionary 2 monetary and fiscal policies implemented worldwide and on inventory accumulation mostly in advanced economies. Despite positive signs of recovery in the global economy, high unemployment rates in advanced countries, primarily in the USA and Euro Area, still persist. With global economic growth mainly based on expansionary monetary and fiscal policies temporary in nature and the fact that unemployment rates remain currently high and oil prices re-started rallying, the global economic recovery will likely to be slow and protracted.