to the previous quarter. combined with the other indicators for june, we expect the industrial production to record a quarterly increase in the second quarter. sales, production, and import indicators regarding domestic demand show that the final domestic demand will continue with an uptrend stemming from consumption demand. investment indicators, on the other hand, signal that the weak outlook will remain in the second quarter. the export quantity index excluding gold increased at a modest rate in the april - may period following the contraction in the first quarter, while imports excluding gold maintained their uptrend suggesting that the contribution of external demand to economic growth may be limited in the second quarter ( chart 18 ). the recovery in economic activity is projected to continue in the upcoming period, yet risks to growth exist. downside risks regarding external demand persist due to geopolitical developments and troubles in europe. moreover, domestic uncertainties, the weak course of the confidence indices, and volatility in financial markets driven by global monetary policies may limit the contribution of final private demand to growth. despite the existence of these factors keeping the downside risks alive, the robust employment performance following the global crisis along with low oil prices generate room for domestic demand and economic policies by improving the current account balance and the inflation outlook. in addition, the expected correction in the agricultural value added emerges as a factor that may support growth on the production side. against this background, we project the second half of 2015 to witness a sustained moderate growth and demand conditions that support disinflation. in line with the favorable developments in the terms of trade coupled with the slowdown in consumer loans, the recovery trend in the current account balance is anticipated to continue in the upcoming period ; yet the weak course of external demand may limit this recovery to some extent ( chart 19 ). as you all know, food, energy and import prices also play a great role in inflation forecasts. therefore, before moving on to forecasts, i will briefly talk about our assumptions regarding these variables. in the second quarter of 2015, oil prices stood slightly above the path projected in the previous report, while usd - denominated import prices remained below projections ( chart 20 ). on an annual basis, we lowered average oil price assumption by 2 percent for 2015, and by around 6 percent for 2016. accordingly, we revised assumptions for annual percentage changes in average import prices downwards by 1. 7 points for 2015 and 1. 4 points for 2016. developments in food prices show that unprocessed

erdem basci : recent economic and financial developments in turkey speech by mr erdem basci, governor of the central bank of the republic of turkey, at the press conference for the presentation of the july 2015 inflation report, ankara, 30 july 2015. * * * accompanying charts can be found at the end of the speech. distinguished guests, welcome to the briefing held to convey the main messages of the inflation report of july 2015. the report typically summarizes the economic outlook underlying monetary policy decisions, shares our evaluations on macroeconomic developments and presents our medium - term inflation forecasts, which were revised in view of the developments in the last quarter, along with our monetary policy stance. in addition to the main text, the report includes six boxes entailing interesting and up - to - date analyses on various topics. these boxes in the report look into the information content of credit in explaining inflation, scrutinize the taxation in the turkish tobacco products market, analyze the export - inflation relationship in food products, examine the use of survey data in short - term gdp forecasts, elaborate on the effect of oil prices on exports, and present information on the government spending multiplier. the titles of the boxes are shown on the slide. all of these analyses shed light on noteworthy issues in the turkish economy. i strongly recommend that you read these boxes, which will soon be published on our website. i would like to commence my speech by reviewing the global economic outlook, given its undeniable influence on our policies. global financial markets remained volatile in the second quarter of 2015, which was attributed to the continued divergence among global monetary policies, the uncertainty surrounding the federal reserve ( fed ) ’ s normalization plans and developments regarding the greek debt crisis. in this period, the volatility in long - term rates reached quite high levels, especially across advanced economies ( chart 1 ), which also affected emerging - market rates. thus, portfolio flows to emerging - markets weakened ( chart 2 ). the global economic slowdown of 2014 continued into the first quarter of 2015 largely due to emerging economies. despite signs of economic recovery in europe, geopolitical tensions continued to restrain turkey ’ s external demand. the volatility across global markets had implications for the turkish economy as well, causing fluctuations in financial indicators amid domestic uncertainty. in this period of heightened volatility in long - term interest rates of advanced countries and added interest - rate sensitivity in emerging economies, the interest