Economic activity, which has seen a rapid decline due to the COVID-19 measures in the second quarter, gained strength since May and partial recovery was made even in the tourism revenues, the Central Bank of the Republic of Turkey (CBRT) said in a statement Thursday.

The statement was published on the bank’s website following a videoconference with investors which has been a part of the central bank’s communication strategy for a while.

Over 200 participants joined the meeting, the statement said. It added that a partial recovery has begun in tourism revenues with the easing of travel restrictions and the recovery in exports. Meanwhile, relatively low levels of commodity prices and real exchange rate levels are set to support the current account balance in the upcoming period.

The tourism sector was one of the hardest-hit by the pandemic with stay-at-home orders, travel restrictions, and the suspension of international flights.

The statement noted that in addition to the unit cost increases caused by the pandemic, developments in the exchange rate and credits limit the demand-side disinflationary effects and that the tendencies of core inflation indicators have increased.

With the continuation of the normalization period, it said, the factors on the supply side, which are effective in the short term with the pandemic measures, will gradually disappear.

"Depending on the progress of the pandemic, uncertainties regarding the course of domestic and foreign demand conditions remain important," the statement added. It highlighted the CBRT, in its Monetary Policy Committee (MPC) meeting in August, left the policy rate unchanged while also deciding on maintaining liquidity measures.

The statement said the financial measures initiated during the normalization process and the tightening of the liquidity expansion are expected to contribute to macro-financial stability and that the central bank will continue to use all the tools to prevent price hikes and maintain financial stability.