such that markets, banks, investors and regulators can make better assessments of the implications of climate change for individual firms. the 2018 action plan on sustainable finance published by the european commission contains further measures that are intended to assist the redirection of public and private capital flows towards sustainable investments. second, there is increasing recognition that high - quality management in both the private and public sectors is an important determinant of long - term prosperity. while this might seem obvious, the evidence indicates that poor - quality management practices are widespread and the variation in management performance correlates with differences in outcomes across firms, industries and countries ( bloom et al 2014 ). in the financial system, we play close attention to the quality of management practices in our regulated firms in relation to governance systems, operational and it risks and the embedding of organisational cultures that meet our requirements in relation to serving the needs of the consumers of financial services. for the public sector, recent international reports have identified scope for improvement in the management of public services and public investment central bank of ireland - unrestricted projects ( international monetary fund 2017, organisation for economic cooperation and development 2018 ). third, a long - term perspective is necessary in designing the optimal path for public investment. the significant social return that may be expected on high - quality public investment pays off over many decades. at one level, this indicates that it is important to maintain a steady pace of public investment, since there are few “ quick wins. ” at another level, it means that public investment cannot be expected to deliver instantaneous improvements in terms of improving productivity or relieving bottlenecks. indeed, in the short term, the additional spending pressures associated with an increase in public investment require offsetting balancing fiscal measures if the economy is operating in the neighbourhood of full capacity. otherwise, there is the prospect of short - term crowding out, with exporting sectors especially affected by the loss in competitiveness associated with a deficit - financed surge in public investment ( hickey at al 2018 ). in contrast, a fiscally - neutral increase in public investment would deliver the long - term gains without inducing short - term overheating. conclusions successful macro - financial policymaking requires a dual focus on managing cyclical volatility and addressing the strategic challenges that ultimately determine long - term economic and social outcomes. in relation to the former, both macroprudential and fiscal policies can contribute to cyclical stabilisation. it is clear that credit dynamics are not the

according closely with the upper bound of the july inflation report forecast ( chart 9 ). the inflation outlook remained benign amid waning cumulative exchange rate effects, weakening demand conditions and modest import prices. cost pressures driven by producer prices remained subdued in this period. on the other hand, rising tobacco prices and adjustments in fuel taxes hampered the improvement in inflation. therefore, consumer inflation fluctuated while annual core inflation remained on a downward track through the third quarter. after a slight increase in the previous quarter, annual food inflation recorded a sharp drop in the third quarter, standing far below the path projected in the july inflation report. the slowing food inflation was mostly attributed to the waning tourism demand, the contraction in exports to russia and the measures placed on red meat. food inflation excluding fresh fruits and vegetables fell to a five - year low of 4. 78 percent in september ( chart 10 ). meanwhile, despite the sluggish economic activity and the slowing food inflation, services inflation remained high mostly due to rising real unit labor costs and rent. 5 / 10 bis central bankers'speeches the underlying core goods inflation slowed down in the third quarter as a result of moderate exchange rates and weakening domestic demand. on the other hand, the underlying services inflation increased. accordingly, the underlying core inflation indicators remained largely flat compared to the previous quarter ( chart 11 ). meanwhile, the tendency to increase prices was down quarter - on - quarter as implied by the diffusion indices for core indicators, while our alternative core inflation indicators posted a more solid decline. in conclusion, considering all indicators capturing the underlying trend and the pricing behavior, i would like to say that underlying inflation continued to improve in the third quarter. esteemed guests, economic activity slowed in the second quarter as we predicted in the july inflation report. the gdp grew by 0. 3 and 3. 1 percent in quarter - on - quarter and year - on - year terms, respectively ( chart 12 ). we observe that the main driver of annual growth was final domestic demand, whereas net exports provided more negative contribution to growth due to the tourism slump ( chart 13 ). the contribution of final domestic demand to growth has been through both public and private consumer spending, while investments remain subdued. public spending provided a large ( 1. 7 points ) contribution to growth as in the first quarter. on the other hand, value added gains were limited in industrial and services sectors with strong linkages to tourism. 6 / 10 bis central bankers'speeches indicators for the third quarter of 2016