##ved globally between 1990 and 2015. − thanks to greater labour mobility, today about 260 million people live in a foreign country, up from less than 80 million in 1970, and flows among developing countries now exceed those towards advanced economies. however, not everybody has benefited in the same way from the economic expansion provided by trade and innovation. economic backwardness, poverty and high mortality rates are still dramatic problems in many developing countries, especially in sub - saharan africa. even in the more prosperous countries, many have been left behind. inequality in the distribution of income has declined dramatically over the last three decades at a global level, mainly as a result of the fast growth of china and other emerging markets that has reduced their distance from the richer parts of the world. however, within most countries differences in income and wealth have risen to historically high levels. finally, the rapid pace of technological progress and its unprecedented nature make it possible not only to replace physical labour but even to displace intellectual contributions in a variety of tasks once believed to be a prerogative of humans. this has raised fears of a new form of technological unemployment, to which the medium - skilled population is also vulnerable, and has helped to spread a sense of insecurity, raising the demand for protection. the two other factors shaping our present and future conditions – demographic transition and climate change – are not independent from, and have actually been reinforced by, global economic integration and technological progress. higher living standards and wider access to better healthcare have increased life expectancy across the globe. for the first time in our history, the world faces not only a growing population – estimated to reach almost 10 billion in 2050, up from 7. 5 billion today ( and 2. 5 billion in 1950 ) – but also an ageing one : there are almost 1 billion people aged 60 or over in the world ( 13 per cent of the global population ) and this age group is growing faster ( at 3 per cent per year ) than younger age groups. in most advanced countries, as well as in china, declining birth rates, with increased life expectancy, are pushing up the so - called old - age dependency ratio, the population over 64 relative to the working - age population ( aged 15 to 64 ). in europe, ageing is progressing at a very fast rate : in italy, the old age dependency ratio has risen from 12 per cent in 1950 to more than 35 today ; in germany, from 14 to 32 per cent. demographic transition,

would lose impact after a while. these forecasts were in line with pricing in forward and futures markets. however, these expectations did not materialize. both crude oil prices and agricultural commodity prices continued to rise. the adverse impacts of supply shocks reached unprecedented levels during the first half of 2008. under normal circumstances, supply shocks are expected to have a temporary impact on relative prices, not changing the course of medium - term inflation. nevertheless, the emergence of multiple shocks at the same time and their persistence for a considerable period aggravated the risks on pricing behavior. in fact, the research conducted by the central bank staff indicates that economic agents increasingly focus on past inflation while forming their inflation expectations. after evaluating the said developments, the central bank concluded that the increases in food and energy prices in recent years reflect a structural change stemming from the global economic environment. in other words, these shocks are likely to prevail for a longer time period, contrary to previous forecasts. there is no clear evidence at this point that this trend will reverse in the short term. moreover, our revised projections suggest that even with the maintenance of a cautious policy stance for the foreseeable future, reaching the 4 percent target is going to take an extended period of time. dear guests, under these circumstances, the central bank of turkey had two options. the first one was to stick to the inflation targets, as many central banks do today, but to avoid implementing a monetary policy that is consistent with these targets. in other words, the central bank would accept a priori that inflation would surpass the target in the foreseeable future. the absence of any policy response would be justified by the presence of supply side shocks. the central banks that adopt this approach are bound to lose their credibility gradually, as long as the inflation continues to remain above the targets. the second option involves revising inflation targets to an attainable level and implementing a monetary policy that is in line with the new targets without compromise. that would help control economic uncertainties and create a new anchor to be used by economic agents in their decisions. dear guests, in light of these evaluations, the central bank of turkey announced the framework of its monetary policy for the upcoming period in the april 2008 inflation report and in the letter on inflation targets that was sent to the government on june 3, 2008. the first pillar of the monetary policy framework is the target revision. the main purpose of the target revision is to create an achievable disinflation