of improvement in employment data during the second half of 2009 are not expected to turn into a robust recovery, suggesting that the unemployment rate will likely remain elevated for an extended period. therefore, unit labor costs would continue to support disinflation ( figure 29 ). overall, recent data releases suggest that the economic recovery has become more robust. domestic demand would continue to recover, while the weak outlook for global growth would dampen economic activity and employment in the tradable sector for sometime. accordingly, we predict that aggregate demand conditions would not restrain inflation for a while. in this context, our revised medium - term forecasts are based on a disinflationary output gap – albeit narrower than envisaged in the previous report. as i mentioned earlier in my speech, the tightness in credit conditions tend to attenuate with the effect of easing global liquidity conditions and improving risk appetites. the healthy state of the turkish banking system is conducive for a rapid recovery in credit volumes. in fact, credit markets have been increasingly supportive of domestic activity in the recent period. accordingly, the first quarter of 2010 was marked by the increasingly benign outlook for credit markets ( figure 30 ). consumer loans have continued to recover while commercial loans have accelerated. credit extended to small - and medium - sized enterprises has also begun to recover after a long period of stagnation, indicating the support of easy monetary conditions on economic activity ( figure 31 ). assuming that external finance conditions continue to ease steadily and that the fiscal stance does not crowd out domestic funding, we expect that credit volumes would continue to expand in the forthcoming period. however, expectations that unemployment rates will remain at high levels for a long period, and ongoing problems in the global economy are still potential factors that might restrain credit expansion. although economic activity in the first quarter of 2010 has been broadly in line with the outlook presented in the january inflation report, there have been some developments, which necessitated an upward revision of the inflation forecast for 2010. as i believe that interpreting these developments accurately is very important, i would like to further elaborate on these developments. first of all, the revisions to the gross domestic product ( gdp ) series, and somewhat stronger than expected domestic demand have led to an upward revision in the output gap estimates, which have pushed the inflation forecast for end - 2010 up by 0. 4 percentage points ( table 2 ). considering recent developments, our oil price assumptions stated in the past report have been revised slightly upwards

radovan jelasic : global compact, social responsibility and global financial crisis speech by mr radovan jelasic, governor of the national bank of serbia, at the regional conference on social responsibility in the chamber of commerce of serbia, belgrade, 4 november 2008. * * * the overwhelming interconnectedness of modern economy on the global scale has been positively confirmed over the last several weeks when the whole world was shaken by turbulences in international capital markets. their effects are evident across all continents and the bout of instability which ensued has again brought to the fore issues like confidence, transparency in private sector operations, the role of the state, profits and bonus payments, as well as the responsibility to educate financial services consumers. i am addressing you here today not only as the governor of the national bank, but also as a representative and a participant in the un global compact, an important initiative launched in serbia with the support of the undp almost a year to date. as you are certainly aware, this initiative promotes socially responsible behaviour, a notion of mounting significance in turbulent times such as these, the role of which shall no doubt grow in future. today, i wish to discuss briefly the effects of the events on the world financial market on serbia and the role of social responsibility within that context. confidence in the financial sector is particularly significant in serbia in view of its turbulent political and economic history. decline in economic activity in developed countries has three main features : 1. in general, people in the west tend to save more, and they save with banks. in serbia, however, there is a saying “ he who is bitten by a snake fears a lizard ” and, unfortunately, the volume of savings in serbia declined in october. however, by withdrawing their savings deposits from bank accounts citizens manage only to multiply the negative effects coming from abroad, and everybody involved stands to loose : citizens lose out on interest earnings, those needing money get smaller and more expensive loans and the state gets less in tax revenues as gdp declines! 2. decline in economic growth in western countries induces decline in inflation due to weaker demand. but in serbia we have often had stagflation, which means minimum / negative economic growth at increased growth in inflation, primarily induced by insufficiently developed market mechanisms, i. e. monopolies and oligopolies. 3. western governments offer sizeable amounts of money, i. e. implement expansionary fiscal policy. but in serbia, we implement expansionary fiscal