Moreover, growth in the world economy is expected to remain relatively resilient, benefiting mainly from sustained growth in emerging economies. This should support external demand for euro area goods and services and thereby investment. This outlook is also reflected in the September 2008 ECB staff macroeconomic projections for the euro area. The exercise projects average annual real GDP growth in a range between 1.1% and 1.7% in 2008, and between 0.6% and 1.8% in 2009. In comparison with the June Eurosystem staff projections, real GDP growth figures for 2008 and 2009 are lower. In the view of the Governing Council, the uncertainty surrounding this outlook for economic activity is particularly high at the current juncture and, generally, downside risks prevail. Risks stem particularly from renewed increases in energy and food prices, which could dampen consumption and investment. Moreover, downside risks continue to relate to the  BIS Review 105/2008  1  potential for the financial market tensions to affect the real economy more adversely than currently foreseen. The possibility of disorderly developments owing to global imbalances also implies downside risks to the outlook for economic activity, as do concerns about rising protectionist pressures. With regard to price developments, annual HICP inflation has remained considerably above the level consistent with price stability since last autumn, standing at 3.8% in August according to Eurostat’s flash estimate, after 4.0% in June and July 2008.
Therefore, looking through temporary factors, we assess that economic activity has expanded at a moderate pace during the final quarter of 2016 (Figure 4). We expect that the recovery will continue to be mild and gradual throughout 2017, which will leave the output gap at the negative territory. Main drivers of growth this year will be public investment expenditures and exports. Figure 3. Figure 4. Industrial Production  Industrial Production  (QoQ, Seasonally Adjusted)  (YoY)  5  3,9  8  4 6  3 2  4 2,0  1 2  0 -1  0  -2 -2  -3 -2,9  -4  1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2012  2013  Source: TURKSTAT, CBRT. 2014  2015  2016  -3,1  -4  1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2012  2013  2014  2015  2016  Source: TURKSTAT, CBRT. On the external side, I would like to note that the Turkish economy has been undergoing a persistent rebalancing process in recent years. Current account deficit has come down from a peak of 9 percent to less than 4 percent recently (Figure 5). Although improvement was partly reversed after mid-2016 due to sharp 3  fall in tourism revenues, we expect the deficit to continue to shrink gradually throughout 2017.