In the euro zone, developments during the fourth quarter were roughly as expected, but the indicators published since then point towards slightly more favourable developments there than was expected in February. At the same time, the oil price has risen much more than expected and forward prices for oil have also risen. We can therefore assume that oil and petrol prices will remain at a high level for some time to come. This of course comprises an uncertainty factor for the economic assessment and it is difficult to ascertain what consequences it will have. The experiences so far indicate that the international economic upswing has been resistant to the increasing oil prices. At home, a considerable amount of new statistics have been published since February, including the national accounts for the final quarter of 2005. GDP growth during the fourth quarter was slightly lower than expected, but for the year 2005 as a whole growth was nevertheless in line with our forecast because the outcomes for earlier periods had been revised upwards. The figures show that exports increased more than anticipated last year, which with hindsight is not surprising, given the strong international growth. On the other hand, both household consumption and investment were weaker during the fourth quarter than in our earlier forecast. Judging by the recent economic indicators, developments so far this year have been better than at the end of 2005.
6  BIS central bankers’ speeches  Accordingly, we based the projections on a stronger domestic demand outlook for the first half of 2013 compared to the previous reporting period. On the other hand, external demand remains subdued. This period did not see a notable change in global growth projections; hence there was no significant revision in exportweighted global growth index (Chart 19). Accordingly, our forecasts are based on an outlook that entails a mild increase in exports driven by market and product diversification as in the previous report. Chart 19. Export-Weighted Global Economic Activity Index* (2008Q2=100)  * For methodology, see Inflation Report 2010–II, Box 2.1 “Foreign Demand Index for Turkey”. Source: Bloomberg, Consensus Forecasts, CBRT. In short, in line with the developments in domestic and external demand, the contribution of aggregate demand conditions to disinflation is envisaged to be larger in the second quarter of 2012; but smaller at the start of 2013 compared to the previous report. Overall, given the lagged effects on inflation, I would like to state that the revision in the output gap did not bring about a noticeable effect on the end-2013 inflation forecast. As you all know, food, energy and import prices also play a great role in inflation forecasts. Therefore, before moving on to forecasts, I will briefly talk about our assumptions regarding these variables. The outlook for import prices did not exhibit a notable change in the interreporting period (Chart 20).