Bi-Weekly Report 19 December 2017 - 8 January 2018


End-year headline inflation to ease from a 14-year high of 11.9% y-o-y in 2017 to a still elevated level of 9.5% at end-2018

The CBRT to keep its key monetary policy instrument on hold at 12.75% throughout 2018



Controversial judicial reform would weaken the rule of law and provides a negative signal regarding the direction of the Government's reform drive

Economic growth is estimated to have reached a post-global crisis high of 6.8% in 2017



Political risk should remain low, at least in H1:18

Economic growth is estimated to have maintained momentum in 2017 (3.8%)



The IMF Executive Board completed the 8th and final review, concluding Serbia's 3-year EUR 1.1bn precautionary SBA

Fitch and S&P upgraded Serbia's long-term sovereign debt rating to BB



Coalition government lost its parliamentary majority as its junior partner -- the Alliance for Albanians -- left; yet, political tensions are unlikely to resurface

The FY:17 Budget is estimated to have met its target deficit of 2.9% of GDP



Albania's chances to secure a non-conditional recommendation from the EC in April to open EU accession talks increased due to progress on judicial reforms

Economic growth is estimated to have reached a post-global crisis high of 4.0% in FY:17 up from 3.4% in FY:16



Inflation to pick up in 2018 due to tightening output gap as well as higher energy prices

The unemployment rate is estimated to have declined to a 5-year low of 11.4% in 2017



FX reserves increased by USD 12.8bn to an all-time high of USD 37.0bn in 2017, following the solid implementation of the loan agreement with the IMF (signed in November 2016)

Customer deposits (FX-adjusted) gained momentum in 9M:17, underpinned by strengthening confidence in the Egyptian economy and higher EGP remuneration rates

Credit to the private sector (FX-adjusted) maintained momentum in 9M:17, supported by ample liquidity for banks, improved asset quality and a strong capital base


Appendix: Financial Markets

Bi-Weekly Report 19 December 2017 - 8 January 2018