Developing Countries excluding China and India: Brazil, Chile, Colombia, Czechia, Hungary, Indonesia, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Romania, Russia, S Africa, Thailand, Turkey, Ukraine. Source: Bloomberg, CBRT. However, the growth has posted a marked slowdown in the third quarter of 2016, following the failed coup attempt. GDP has contracted year-on-year terms for the first time since the global financial crisis. The weakness in economic activity was driven by a sharp fall in domestic demand and the sizeable drop in tourism revenues (Figure 2). 2  Figure 2. Annual GDP Growth and Contributions (Percentage Points) Net Exports  15  Final Domestic Demand  13  Other*  11  GDP  9 7 5 3 1 -1 -3 09.16  06.16  03.16  12.15  09.15  06.15  03.15  12.14  09.14  06.14  03.14  12.13  09.13  06.13  03.13  12.12  09.12  06.12  03.12  12.11  09.11  -5  *Contains stock movements and residual item. Source: TURKSTAT. One important question was whether the third quarter would stay as a temporary slump or more slowdown was on the way. Recent indicators suggest that the contraction in economic activity was short-lived. We observed a rebound in the final quarter of the year as depicted by the rapid recovery in the industrial production (Figure 3). Some of the recovery can be attributed to corrections due to technical factors such as shifting holidays and associated changes in the number of working days.
TL and EM Currencies Against USD (01.01.2016=1) Emerging Markets Average Turkish Lira  1,45 1,40  Coup Attempt  Moody’s Downgrade  US Election  CBRT Policy Response  1,45 1,40  02.17  01.17  12.16  11.16  0,90 10.16  0,95  0,90 09.16  1,00  0,95 08.16  1,05  1,00  07.16  1,10  1,05  06.16  1,15  1,10  05.16  1,20  1,15  04.16  1,25  1,20  03.16  1,30  1,25  02.16  1,35  1,30  01.16  1,35  Emerging markets include Brazil, Chile, Colombia, Hungary, Indonesia, Malaysia, Mexico, Philippines, Poland, Romania, S. Africa. Source: Bloomberg. The policy we adopted has been also effective on the volatility indicators. The last figure I would like to show you pertains to the volatility in the FX market (Figure 16). As you can see, the implied volatility of Turkish lira has moved up sharply in earlyJanuary, but eased significantly after the implementation of the recent CBRT measures. 10  Figure 16. Options Implied TL Volatility (1-Month, Percent) 30  US Election  Coup Attempt  CBRT Policy Response  25  20  15  10  5  02.17  01.17  12.16  11.16  10.16  09.16  08.16  07.16  06.16  05.16  04.16  03.16  02.16  01.16  0  Source: Bloomberg. Dear Participants, Let me wrap up my speech by highlighting the value of close policy coordination.