ahap kavcolu : recent economic and financial developments in turkey speech by mr ahap kavcolu, governor of the central bank of the republic of turkey, at the 91st ordinary meeting of the general assembly, ankara, 28 march 2023. * * * esteemed shareholders, distinguished guests, before i start my speech, i would like to wish allah almighty's mercy on our citizens who lost their lives in the devastating earthquakes in february, i extend my condolences to their grieving families, and i wish a speedy recovery to those who are still being treated. i would like to commemorate again prof. yusuf tuna, our esteemed professor and member of the monetary policy committee, who passed away last year. before moving on to the agenda items to be discussed at the general assembly, i would like to share with you our assessments regarding the macroeconomic outlook and our monetary policy implementations. in the last part of my speech, i will summarize our activities in 2022. distinguished participants, in 2022, while the negative effects of the pandemic had not yet been fully eliminated, as a result of the russian - ukrainian war that took place in turkiye's immediate region, supply constraints appeared again and particularly energy prices and global commodity and food prices rose rapidly. in addition to the geopolitical uncertainties that emerged due to the war, the supply - demand imbalances that persisted in the aftermath of the pandemic caused inflation to increase rapidly on a global scale, reaching historically high levels. in addition to all these developments, global financial conditions tightened, and 2022 was marked by exceptionally high levels of geopolitical, economic and financial uncertainties. in 2022, the turkish economy continued to grow uninterruptedly despite global supply shocks and unfavorable geopolitical developments stemming from the russianukrainian war. economic activity was particularly strong in the first half of the year and maintained its robust outlook in the second half of the year despite the decrease in external demand. accordingly, in 2022, the turkish economy grew by 5. 6 %, ranking among the top g20 and oecd countries thanks to its growth performance since the last quarter of 2019. in addition, turkiye ranked ninth in terms of national income calculated according to purchasing power parity and doubled its share in the global economy. in 2022, the turkish economy reached the highest level of national income in terms of us dollars since

2014. in the first half of last year, annual consumer inflation increased rapidly due to the sharp rise in global energy, commodity and food prices, disruptions in supply processes, and price formations in fx markets detached from economic fundamentals in the last 1 / 4 bis - central bankers'speeches quarter of 2021. as the effects of global supply shocks waned and fx markets stabilized, a gradual normalization process started in the underlying trend of inflation as of the second half of 2022. in the period ahead, the policy mix we implemented under the liraization strategy will continue to foster financial stability through healthy credit growth, and potential output through the financing cost channel, and will contribute positively to the supply - demand balance. as a result, an improvement in pricing behavior and inflation expectations and a permanent fall in inflation will be ensured. esteemed guests, in this part of my speech, i would like to talk about our monetary policy practices in 2022. in 2022, to reshape price stability within a sustainable context, we conducted a comprehensive policy framework review process that prioritizes the turkish lira in all policy instruments. accordingly, we implemented the liraization strategy, which we developed with a holistic approach. with the liraization strategy, we tried to eliminate the sensitivity of inflation and pricing behavior to the exchange rate in the short term. in the medium term, we aimed to strengthen the current account balance by supporting production and exports. with the macroprudential tools and fx - protected deposit products we have introduced to this end, we began the liraization process of the banking sector on both the asset and liability side. we adopted a targeted loan approach in terms of creating financial conditions that will ensure permanent improvement in the current account balance by increasing production and exports in our country. while implementing the liraization strategy, we updated our macroprudential policy set according to our targeted loan approach to contain the risks to financial stability and price stability along with interest rate cuts. we based our targeted loan approach on a framework that prioritizes the use of loans in areas of activity that support investment, production and employment. with our macroprudential tools, we also prevented the risks that credit growth may pose to price stability and financial stability. as another pillar of our targeted loan approach, we have effectively utilized advance loans against investment commitment with a grace period of two years and maturities up to ten years to encourage increased exports and investments in the production of import - sub