Bi-Weekly Report 15-28 August 2017


Banking sector bottom line posted double-digit growth in Q2:17, despite strong headwinds from non-core activities



The current account deficit widened to 2.7% of GDP on a 4-quarter rolling basis in Q2:17 from 2.3% at end-2016, reflecting sizable fiscal policy stimulus

Overheating pressures should prompt the NBR to tighten its stance



The 4-quarter rolling current account surplus narrowed to 3.7% of GDP in Q2:17 from 4.2% in Q4:16, due to a higher energy bill

Tourism activity remained strong in H1:17, sustaining economic growth and the CAS



The profitability of the banking system improved markedly in Q1:17



The fiscal deficit widened in the first 7 months of the year, as the new Government started the clearance of accumulated arrears

The FY:17 fiscal deficit target is set to surpass its target by a wide margin (0.9 pps of GDP), unless some pre-election pledges are postponed and/or capital spending is under-executed



The fiscal balance deteriorated in 7M:17, due to pre-election expenditure slippage

The FY:17 fiscal deficit is set to overperform both its target and the FY:16 outcome, assuming expenditure is brought back on track after the elections



Tourist arrivals growth slowed to a still strong 18.1% y-o-y on a 12-month rolling basis in July from 21.2% in December, mainly due to a slowdown from the main source countries -- the UK and Russia

Banking sector deleveraging slowed in H1:17, due to an increase in new loans

Customer deposit growth declined in H1:17, mainly driven by non-residents



The IMF-supported programme has started to bear fruit, with the fiscal deficit narrowing by an estimated 2.0 pps to a still high 10.5% of GDP in FY:16/17

SDR-denominated Suez Canal receipts (SCR) boosted budget revenue by an estimated 0.4 pps of GDP in FY:16/17, on the back of large currency valuation effects


Appendix: Financial Markets

Bi-Weekly Report 15-28 August 2017