In conclusion, in an environment where the resource utilization has yet not reached pre-crisis levels and no demand pressure is observed, we anticipate that core inflation indicators will remain consistent with medium-term targets and economic recovery will be slow and protracted. 2. Turkey’s long-term growth performance and potential growth rate  In the second part of my speech, I would like to share with you my views on the necessary reforms for the establishment of strong and sustainable growth in Turkey as well as those to increase its long-term potential growth rate. The growth rate of a country is determined by three factors. These factors can be summarized as: (1)  Capital deepening  (2)  Employment growth and  (3)  Total factor productivity  When we look at the last fifty years in the Turkish economy, we see that Turkey’s average growth rate has been around 4.5 percent. A study carried by staff members of the Central Bank of Turkey, Dr. Seref SAYGILI and Dr. Cengiz CĐHAN, suggests that capital deepening has a large share, as much as 75 percent, in this growth rate. According to the same study, the contribution of employment growth and the increase in productivity remained very limited, at 20 percent and 5 percent, respectively. There is no doubt that capital accumulation plays a leading role in the development of an emerging economy, as expected. Other country cases also present a similar outlook.
There are now 14 Asian economies at investment grades, of which, nine are at or above the single A rating. At the same time, the supply side factors are also highly favourable. The huge financing needs of Asia will support a continuous expansion in bond issuance. According to the Asian Development Bank, Asia’ s infrastructure financing needs alone amounted to USD 8 trillion from 2010 to 2020. Equally important is the emergence of new and attractive bond asset classes. The two products that have caught most attention of global investors are the sukuks in Malaysia and the RMB dim sum bonds in Hong Kong. This is rightly so as these products connect the global market with the vast and increasingly prominent financial systems in the Islamic world and China. We have seen very encouraging development of the sukuk market in Malaysia, the symbol of Islamic financing. The amount of outstanding sukuks in Malaysia increased substantially from MYR 146 billion (USD 41.3 billion equivalent) at the end of 2006 to MYR 361 billion (USD 113.9 billion equivalent) at the end of 2011. Meanwhile, the growth of the RMB debt securities market has been phenomenal. In a short space of 5 years, the annual issuance amount lodged with the Central Moneymarkets Unit (CMU) in Hong Kong increased by 16 times from a modest amount of RMB 10 billion (USD 1.4 billion equivalent) in 2007 to RMB 172 billion (USD 27.3 billion equivalent) in 2011.