The implementation of quick and concrete measures, which guarantee the long-term stability of public debt, seems that shall condition considerably the future development. World financial markets have reacted tensely against these developments, being characterised by a high volatility and an increase of risk primes throughout the instruments variety, markets and financial agents. Turning to the domestic economy, the latest qualitative and quantitative indicators show a slow performance of economy in the early months of 2010. The deceleration of domestic demand is compensated by a positive and growing performance of the Albanian exports. The domestic inflationary pressures were low and the consumer price inflation declining. Monetary markets revealed more calm, characterised by a dropping trend of interest rates, liquidity situation improvement of the banking system and a more stable performance of the exchange rate. However, lending to economy continues to maintain low growth paces. Indirect and prior estimates suggest that the paces of private consumption have been controlled, conditioned by restricted sources of its financing and by the higher tendency of consumers regarding savings. The low level of capacities utilisation in economy, the low paces of loan for investments and the fall of capital and intermediate goods import, signal a contraction of private investments even during the first three months of this year. The demand for monetary assets of private sector continues to be low, thus reflecting a deceleration of the economic activity. The annual pace of lending growth, excluding the exchange rate effect, for this sector slowed down onwards, at 4.8 percent in March.

Indsutry  Construction  Services  Net Tax  GDP  Private Consumption  Private Public Public Stock Investment Consumption Investment Change  Net Export  Source: TURKSTAT. Turkey’s export performance has become more vulnerable to global cyclical changes in recent years as the share of durables and capital goods in our exports has increased over time. In fact, the significant slowdown in our major trading partners and the consequent contraction in exports were among the determinants of the sharp downturn in aggregate demand. Therefore, the assumptions on the global economy with respect to the inflation and monetary policy outlook presented in the Inflation Report that will be posted on our Website shortly are very important. The impact of the global financial turmoil in the corporate sector has become more evident and global growth has significantly contracted. The credit crunch in international credit markets still persists and there is yet to be a notable improvement in global economic indicators. Our baseline scenario in the January Inflation Report envisaged a gradual recovery in the global economy as of early 2010. On the back of the deepening global financial turmoil in the past period, many international institutions revised their growth forecasts for 2009 and 2010 downwards by a significant margin (Table 3). The forecasts for global economic activity, which were revised in the last three months, indicate a sharper contraction for 2009 compared to our forecasts presented in the January Inflation Report and a slower and more gradual recovery throughout 2010.