the recovery in the services and tourism sectors ensures a rebalancing in the composition of demand in the third quarter in terms of goods and services. in fact, sectoral confidence indices also suggest a significant improvement in recent months particularly in the services and retail sectors. when talking about the recent developments, i would like to place a special emphasis on investments. data for the second quarter indicate that investments, particularly in machinery - equipment, contributed significantly to growth. the cbrt ’ s research shows that our firms have a high investment appetite. in the recent surveys, firms operating in all sectors excluding construction have reported that the weight of financial constraints among factors limiting activity / production has declined. we see that the weight of this factor is even below the historical averages currently. moreover, investment and employment tendencies of firms have reached very high levels compared to previous years. we are pleased to see that the improvement in the employment expectation of firms also continues in the third quarter while the investment tendency remains strong across main sectors. we envisage that as the improvement in macro indicators continues in the upcoming period, as the risk premium declines and volatility decreases on the back of improving current account and inflation outlook, the credit channel will function effectively and stabilize the positive outlook regarding the investment appetite. although there seems no obvious problem in accessing credit, high loan rates limit the access to credit. we are closely monitoring the progressive increase in the demand for loans for investment, operating capital and stock enhancement, and the gradual decrease in demand for debt rollover. high - frequency data also signal a recovery in the labor market on the back of the reopening. although employment in the services sector has been recovering more slowly amid pandemic - related restrictions and is still slightly below its prepandemic level, employment growth in the industry and construction sectors as well as the non - farm employment has exceeded pre - pandemic levels. we consider that the services employment will also exceed its pre - pandemic levels in the upcoming period. in the last couple of years, our economy suffered a variety of shocks, with the pandemic in the lead. the central bank has adopted a policy that curbs the lasting effects of these shocks, safeguards domestic and external balances and prioritizes price stability as the ultimate goal. we are closely monitoring the current account and external financing data. currently, the upward trend in exports, the recovery in tourism and the significant decline in gold imports support the ongoing improvement in the external

speeding up the improvement in employment and credit conditions. accordingly, the low bis central bankers ’ speeches level of interest rates in advanced economies was maintained, and monetary easing continued in 2010 as well. 11. ample liquidity as a result of low interest rates and the ongoing quantitative easing in advanced economies encouraged global investors to seek higher returns and demand risky assets. consequently, emerging economies experienced a surge of capital flows. the divergence between the pace of recovery in advanced and emerging economies in favor of emerging economies, as well as the permanent improvement of the risk sentiment for emerging economies in the post - crisis period also supported these capital inflows. indeed, the fact that the risk premium indicators in many emerging economies including turkey are below pre - crisis levels, and the consequent upgrades by credit rating agencies indicate the permanent change in risk sentiment for these countries. 12. as a result of capital inflows, emerging market currencies appreciated and asset prices rose sharply. furthermore, capital inflows in emerging economies raised concerns over financial stability by fuelling domestic demand and thus causing rapid credit growth. 13. under these circumstances, central banks of emerging economies focused on containing upside risks on inflation amid the strong rise in domestic demand as well as limiting financial risks due to massive capital flows. accordingly, many central banks of emerging economies withdrew the liquidity measures adopted during the crisis and embarked on monetary tightening in 2010. meanwhile, central banks of emerging economies took additional measures against financial and macro financial risks such as excessive credit growth due to accelerated capital inflows, widening current account deficits and the short maturity of the foreign capital. accordingly, in addition to using policy rates, they opted for a tighter monetary policy stance through the active use of alternative instruments such as required reserve ratios, reserve accumulation and capital controls. bis central bankers ’ speeches 14. the monetary tightening in emerging economies through policy rates and alternative instruments is expected to continue in the upcoming period. meanwhile, advanced economies are expected to end their easing measures in 2011 and to start normalizing policy. in fact, the european central bank took the first major step in this regard by raising the policy rate to 1. 25 percent in april by 25 basis points. 15. however, as i mentioned previously, it is impossible to claim that downside risks on the global economy have completely faded away. as a matter of fact, recently mounting concerns over debt sustainability in peripheral euro area countries indicate that these risks still remain, albeit to a lower degree. furthermore, the