speech central bank of the republic of turkey prof. sahap kavcıoglu, governor cbrt 89th ordinary meeting of the general assembly 30 march 2021, ankara esteemed shareholders, distinguished guests on the occasion of this meeting, i would like to express my pleasure to be here with you today as the governor of the central bank. i believe that we will duly fulfill our responsibility with all my colleagues at the central bank in the period ahead, and i wish that the new period will be beneficial to our country, our nation and our bank. today, we are holding this meeting under safety measures due to the coronavirus pandemic going on for the past year, which has deeply affected both our daily lives and world economies. i salute all the stakeholders and audience attending our general assembly meeting either in this hall or in front of their screens. the pandemic that has been going on for over a year has caused, among other things, economic challenges and uncertainties all over the world. as you know, the measures that have been put in place to curb the spread of the pandemic since the first quarter of 2020 have adversely affected growth performance of economies all over the world. for this reason, countries have tried to mitigate the potential impact of the pandemic on their economies through expansionary monetary and fiscal policies. at this point we see an improvement in the global growth outlook and an increase in international commodity prices on the back of positive developments in the vaccination process, in addition to expansionary policies. however, despite the ongoing vaccination efforts, the ongoing uncertainties regarding the vaccination process and the course of the pandemic keep the risks to the global economy alive. distinguished guests, at my first general assembly meeting, let me briefly share with you some important issues regarding the monetary policy. under the duties and powers set forth by law and in line with its main objective of achieving a permanent fall in inflation, the central bank of the republic of turkey will continue to use the monetary policy tools effectively. we are strictly committed to the medium - term inflation target of 5 %, defined as price stability and set jointly with the government. we are going to use the monetary policy tools appropriately to achieve this target. i would like to underline that we are determined to bring inflation down to 5 % in 2023 and keep it there permanently, consistent with the medium - term framework we set out in the january inflation report. i am aware that the

an earlier and stronger recovery in the turkish economy, compared to that of the global economy. accordingly, since the height of the crisis, by mid - 2009 turkey ’ s gdp and industrial production have increased by 11 percent and 21 percent, respectively, while the unemployment rate has dropped by approximately 3 percentage points. although the level of production is still below its pre - crisis level, we expect that it will exceed this level in 2010. meanwhile, we envisage that it will take an extended period for the labor market to recover. the global economy has displayed a mild recovery since the second half of 2009. yet, european economies have recently shown signals of deceleration. although problems in the credit markets of advanced economies have attenuated, they have not been completely eliminated yet. as a matter of fact, credit developments in the usa and the euro area suggest no significant increase in credit volume. the unresolved issue of troubled assets in the banking sector of advanced economies impedes proper functioning of the credit mechanism. meanwhile, soaring and persisting high unemployment rates in many countries reduce household expenditures and negatively affect the aggregate demand. soaring budget deficits and public debt stocks stemming from loose fiscal policies implemented in developed countries are an important risk factor that may adversely affect private demand by increasing long - term interest rates in the years ahead. the risks that i have mentioned above also have the potential to affect the turkish economy in a negative way. considering that our largest exports market is the european union, problems prevailing in european economies pose an important risk for our economy, too. as a matter of fact, external demand indicators have recently indicated a partial slowdown. global turbulence also has the potential to affect the turkish economy negatively through the channel of expectations. problems in the global financial markets are likely to restrain the accessibility of external financing. in conclusion, in an environment where the resource utilization has yet not reached pre - crisis levels and no demand pressure is observed, we anticipate that core inflation indicators will remain consistent with medium - term targets and economic recovery will be slow and protracted. 2. turkey ’ s long - term growth performance and potential growth rate in the second part of my speech, i would like to share with you my views on the necessary reforms for the establishment of strong and sustainable growth in turkey as well as those to increase its long - term potential growth rate. the growth rate of a country is determined by three factors. these factors can be summarized as : capital deepening employment growth and total