Bi-Weekly Report 2-15 May 2017


Banking sector bottom line improved significantly in Q1:17, despite an adverse operating environment



The 4-quarter rolling budget deficit widened to 2.6% of GDP in Q1:17 from 2.4% at end-2016 due to a looser incomes policy

The NBR kept its key interest rate on hold, but cut its reserve requirement rate (RRR) on FX liabilities



Temporarily lower grants from the EU and higher current spending pushed down the 4-quarter rolling budget surplus to 0.7% of GDP in Q1:17 from 1.6% at end-2016

The recovery in the residential real estate market improved in FY:16



Activity slowed sharply in Q1:17, mainly due to unfavourable agricultural output

FX-adjusted customer deposit growth reached an 8-year high of 11.7% y-o-y in March



An SDSM-led Government to take office

The current account deficit rose to 3.6% of GDP in February from 3.1% in December on a 12-month rolling basis, mainly due to a wider trade deficit

Headline inflation rose to 1.0% y-o-y in April from -0.2% at end-2016, on the back of higher core inflation



Political parties reached an agreement to end the 3-month political deadlock

Credit growth, adjusted for large write-offs and FX variations, is estimated to have posted strong growth of c. 1.9% in March

The unemployment rate declined for a second successive year to 15.6% in FY:16



The fiscal surplus increased to 0.7% of GDP in Q1:17 on a 4-quarter rolling basis, from 0.4% in Q4:16

Headline inflation reached a peak of 2.0% in April



FX reserves have increased sharply, by USD 9.6bn to USD 28.6bn, through higher foreign borrowing following the signing of the 3-year EEF with the IMF

GDP growth slowed to 3.6% y-o-y in H1:16/17 from 4.5% a year earlier, on the back of a tight fiscal stance


Appendix: Financial Markets

Bi-Weekly Report 2-15 May 2017