15
Activities
The weak recovery in the
Eurozone and Japan brought about
new decisions to extend their
expansionary monetary policies.
Although the economy recovered in
developed countries except for the USA in
2015 compared to the previous periods,
the overall economic activity remained
weak. The asset purchase program initiated
by the European Central Bank (ECB) in
the last quarter of 2014 and the scope
of which was expanded in March 2015,
did not produce the intended economic
recovery outcome. The ECB, which took
into account the downward risks to the
economy, took new expansionary policy
steps in December. Similarly, in Japan the
main economic indicators remained below
the targets. Starting from the beginning of
2016, the Japanese Central Bank adopted
new expansionary monetary policies.
Energy and commodity prices
dropped rapidly.
Global demand conditions remained
sluggish in 2015 in parallel to a slowdown
in emerging markets, most notably in China.
In addition, due to a stronger expectation
that there would be an increase in excess
supply, oil prices continued to fall. Oil prices
fell by more than 30% in 2015 compared
to the previous year and they dropped to
their lowest levels in the last 11 years in
December. Prices of agricultural products
and metals also declined in this period.
Future outlook
With the divergence in monetary policies
across central banks of developed countries
becoming more and more evident in 2016,
the strengthening of the US Dollar is
expected to continue while global capital
flows will likely be determined by the Fed’s
interest rate policy. On the other hand,
the Fed signaled that the next rate rise
decisions will be gradual and moderate
and, in this framework, it will continue
to support the economy through its
accommodative monetary policy stance in
the coming period. In 2016, the course of
commodity prices will also be a determining
factor in the overall global economic
outlook. Commodity prices are forecast to
remain at low levels in parallel to relatively
weak demand conditions as a result of the
economic downturn in China. Although this
is considered to affect positively external
balance and inflation in commodity-
importing countries, the longer the prices
remain low, the greater the negative impact
on commodity-exporting countries will be.
Increased price volatility on the other hand
could lead to additional risks for the global
economy.
Global demand
conditions were weak
in 2015 in parallel to the
slowdown in developing
countries, most notably
in China.
