durmus yılmaz : the impacts of the current crisis on oic member countries opening speech by mr durmus yilmaz, governor of the central bank of the republic of turkey, in the meeting of the governors of the central banks and the financial authorities of the organization of the islamic conference member countries, istanbul, 3 october 2009. * * * governors of central banks and financial authorities of the member countries of the organization of the islamic conference ( oic ), dear guests, i would like to express our pleasure to host this event and such distinguished participants here in istanbul. welcome to the meeting of the governors of the central banks and the financial authorities of oic member countries, which is the only organization that gathers islamic world under one roof. what makes this meeting more meaningful is that we are also celebrating the 40th anniversary of the organization of the islamic conference and 25th anniversary of the standing committee for economic and commercial cooperation of the organization of the islamic conference ( comcec ) this year. as the cradle of civilizations for centuries and the european capital of culture in 2010, istanbul is an ideal venue for this meeting. dear guests, the current global financial and economic crisis, we have been experiencing since last year, has profound negative impacts on the economies of many countries in all parts of the world, reinforcing inspiration and need for restructuring the current order of the global community based on the principles of justice, equity, participation and peace. the efforts are in progress at the international level to build the institutional, legal and humanitarian infrastructures of the globalization that we are de - facto living during the last 20 years. the muslim world had the experience of building and maintaining a global order that embraced diversity and harmony over the regions spreading from atlantic to pacific and central asia to central africa from early 9th century till the end of 17th century where not only muslims but also all members of the humanity experienced economic, social and political integration at a global scale and, unlike the turmoil and turbulence in the rest of the world, free trade and free movement of people prevailed without any discrimination against ethnic and religious identities. as member countries of the standing committee for economic and commercial cooperation of the organization of the islamic conference ( comcec ), our goal is to make a meaningful contribution to the idea of building a sustainable and stable global order to reach peace and prosperity that embraces differences between the civilizations as a source of richness and not a reason for clash, on the principles of justice, equity, participation and

indexation behavior, persisted in the third quarter. in the third quarter, services inflation was mostly shaped by opening of schools. education services increased at a high rate due to university tuition fees. school bus fares and student residence fees raised prices of transport services and accommodation services, respectively. as the back - to - school period ended, the relative price adjustment in these groups was mostly completed. we evaluate that it is more reliable to assess the dynamics of services prices in rent and non - rent terms. 4 / 10 bis - central bankers'speeches having also a structural dimension, rents need to be handled separately due to factors such as earthquakes, urban renewal ( demolishing - rebuilding ) and limitations on rent increases. in fact, the high price increase in rents continued in the previous quarter as the contract renewal rate increased. as you can follow from the right panel, the rent increase rates obtained from both the retail payment system data and housing valuation reports remain below the cpi annual rent inflation and are receding. the decline in the reference rates in contract renewals suggests that monthly rent inflation will lose pace in the last quarter. we recommend you to read the box on this subject. the inertia in rent inflation is higher than we projected, yet we see that the deceleration in services excluding rent is more pronounced. in the industrial sector, pricing behavior of firms exhibit a clear improvement. the analysis of domestic sales price expectations in the manufacturing industry reveals that among firms expecting an increase in either domestic demand or unit costs, the ratio of those planning to increase prices has been declining steadily. the ratio of those planning to increase prices among firms not - expecting an increase in unit costs is also decreasing. in fact, the average monthly producer inflation hovers around 1. 4 percent in the last three - month period. therefore, producer - driven pressures on consumer inflation are weakening. this course in producer inflation affects goods prices in cpi favorably. you can see on the left panel that price increases lost pace considerably. despite a relative increase due to the depreciation in the turkish lira in august, core goods inflation remains low overall. the annualized underlying inflation in the last three - month period hovers around 20 percent in core goods. the moderate outlook is maintained particularly in prices of durable goods. the diffusion of price increases is as crucial as their size for the course of price - setting behavior. demand conditions affect not only the size but also the diffusion of price increases. in fact, there is a significant positive