Bi-Weekly Report 23 January - 5 February 2018

​Turkey                                                                                    

Lending activity (FX-adjusted) rose sharply in 2017, largely benefiting from the Government's credit guarantees and relaxed macro-prudential measures

Customer deposits (FX-adjusted) accelerated in 2017, supported by dissipating uncertainty after the mid-April referendum and more attractive remuneration rates

The tourism sector emerged from a deep crisis, due to the return of Russian tourists, as well as easing domestic security concerns and competitive prices

Romania

The budget deficit widened to 2.9% of GDP in FY:17 from 2.4% in FY:16, due to tax cuts and a looser incomes policy

The FY:18 budget deficit could reach excessive levels, due to a further easing in incomes policy and a tax overhaul

Bulgaria

Lower grants from the EU and (to a lesser extent) higher current spending pushed down the budget surplus to 0.8% of GDP in FY:17 from 1.6% in FY:16, which is far better than the deficit target of 1.4%

Fiscal policy is set to become more expansionary in FY:18

Serbia

Inflationary pressures heightened in 2017, due to unfavourable food prices, but remained well anchored

NBS to initiate a new cycle of monetary policy tightening in Q3:18

FYROM

The 2017 Budget outperformed its target, coming in at 2.7% of GDP

Credit activity picked up in FY:17, due to the return of political stability

Customer deposits maintained momentum in FY:17, supported by tighter labour market conditions

Albania

The fiscal balance deteriorated by 1.3 pps of GDP in 11M:17, due to pre-election expenditure slippage

Despite the negative 11M:17 performance, the FY:17 deficit target of 2.0% of GDP is estimated to have been met

Cyprus                                                                                     

President N. Anastasiades secured a second term in office, receiving a strong mandate to resume reforms

The slowdown in deleveraging continued in 2017, on the back of stronger credit to corporates

Strengthening customer deposits helped improve banks' liquidity in 2017

Egypt

Outgoing President el-Sissi is widely expected to win the upcoming presidential elections in the first round

SDR-denominated Suez Canal receipts (SCR) set to post positive growth for the first time in 3 years and reach a record high in 2017/18, on the back of a rebound in global trade

Appendix: Financial Markets