The largest contribution to annual growth in the third quarter came from private sector demand through consumption and investment; whereas, due to the contraction in exports and the acceleration of demand for imported goods, the net foreign demand contributed to annual growth negatively. Thus, the divergence between domestic and foreign demand growth has become evident (Figure 18). BIS central bankers’ speeches  9  Recent data releases indicate that the third-quarter slowdown in economic activity is temporary. The composition of economic activity suggests that the divergence between domestic and foreign demand continued in the fourth quarter. Domestic demand for imported goods accelerated in the last quarter amid rapid credit expansion and lagged effects of the appreciation of the Turkish lira in the third quarter. As a result, the current account balance continued to deteriorate (Figure 19). The slow recovery in the global economy continues to restrain economic activity, whereas the strong domestic demand bolsters aggregate demand growth. In fact, the sharp upward trend in private consumption and investment spending that started in the fourth quarter of 2009 continued into the fourth quarter of 2010 (Figure 20). Continued economic recovery fueled by robust domestic demand has supported the gradual improvement in employment conditions. The rapid recovery in non-farm employment paused in the third quarter of 2010, which appears temporary, as suggested by leading indicators  10  BIS central bankers’ speeches  (Figure 21). However, due to high labor force participation rates, it will take a while before unemployment rates come down to precrisis levels (Figure 22).

Even more, as the economy is undergoing major structural changes, particularly in the export sector, the regular monitoring of the newcomers provides a very clear vision of their impact on the economy in general. Even more, as some of the aggregate official statistical data, where the weight structure of the different sectors is revised at a predefined time interval, cannot capture the impact of the structural reforms, having satellite individual data on new companies is profoundly beneficial for policy analysis and decision-making. The granularity of the data available helps largely to improve the forecasting process in the Bank, which is the core in the anticipative monetary policymaking. Given the heterogeneity, in the external sector in particular, the probability that different segments behave and will behave differently is large. For that reason, as a complement to the model-based forecasting process, we regularly consult “soft” survey data on business plans of the main exporters and importers. Firm-by-firm data analysis is also used as a tool when screening the data on capital flows (FDI, external debt, portfolio investments where data are available on a security-by security basis), as a complementary to the analysis on the aggregate level. When discussing monetary policy and the data requirements, after the crisis, one of the important areas is of course the implementation of unconventional monetary policy measures. Does the unconventional monetary policy ask for unconventional statistics?