Survey indicators point to a continued strong course in external demand in the manufacturing industry. The ratio of exports to imports reached a high plateau of some 85%. In the first half of the year, the real balancing in foreign trade is quite evident. Against this background, we expect that the current account will post a surplus in the rest of the year due to the strong upward trend in exports, and stimulus to tourism from the progress in the vaccination program. Turkey has gradually reduced its foreign trade deficit with Europe, but continues to run a deficit in trade with Asia. At this point, I would like to reiterate that the swap agreements we have made as the Central Bank essentially aim to facilitate trade in local currency. Distinguished Guests, Now, I would like to touch on the inflation outlook. Last Friday, August inflation data were released. Annual inflation increased by 0.30 points to 19.25%. In this period, the annual inflation rate of the B index, which is a core inflation indicator and obtained by excluding unprocessed food, energy, alcoholic beverages and tobacco from the CPI, decreased by 0.05 points to 18.46%, and that of the C index, which excludes processed food from the B index, declined by 0.46 points to 16.76%. In August, while annual inflation increased significantly in the food group, it posted a limited rise in services and receded across other main groups. Meanwhile, producer inflation continued to increase due to commodity prices, disruptions in supply chains and demand conditions.

The number of vaccine doses administered has exceeded 99 million, with 50 million people getting at least one dose. Despite the recent increase in social mobility following the reopening, the number of cases remains relatively low thanks to the performance of the vaccination rollout. The widespread vaccination of the population has a positive impact on the economic activity, employment and the current account balance. As for Turkey’s macroeconomic outlook, consistent with our projections, national income has grown by 21.7% annually in the second quarter on the back of the base effects. Looking at quarterly growth figures excluding the base effects, we see a 0.9% increase in national income compared to the first quarter, with contributions from both domestic and external demand. In the second quarter of the year, many European countries recorded high rates of growth due also to the base effects. In this period, Turkey’s growth outperformed many European countries, and the Turkish economy recorded the second-highest rate of growth after the UK. Consumption and machinery-equipment investments were the main drivers of annual growth. The positive outlook in vaccination in Europe is affecting our economy via tourism and external demand channels. In this context, net exports also continue to contribute positively to growth. Leading indicators show that domestic economic activity remains strong in the third quarter, with the help of robust external demand. Survey-based indicators point to a strong upward movement in both domestic and export orders. 5  High-frequency data show a rapid recovery in the pandemic-stricken subsectors of services amid increased mobility.