Bi-Weekly Report 24 October - 6 November 2017


Headline and core inflation reached multi-year highs of 11.9% and 11.8% y-o-y, respectively, in October

No monetary easing expected before end-2018

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



The 4-quarter rolling budget deficit widened to 2.7% of GDP in Q3:17 from 2.4% in Q4:16, due to tax cuts and a looser incomes policy

The FY:18 budget deficit could reach unsustainable levels, due to a looser incomes policy and a tax overhaul



Lower grants from the EU and higher current spending pushed down the 4-quarter rolling budget surplus to 0.5% of GDP in Q3:17 from 1.6% in Q4:16

Fiscal policy is set to remain expansionary in FY:18



The profitability of the banking system improved markedly in H1:17



The ruling coalition secured a landslide victory in the October local elections, strengthening its hand versus the opposition

The fiscal performance deteriorated in 9M:17, mainly due to higher social transfers and subsidies

FYROM maintained a leading position in this year's World Bank's Ease of Doing Business rankings



The fiscal balance deteriorated in 9M:17, due to pre-election expenditure slippage

Fiscal prudence to be observed in 2018



Fitch upgraded Cyprus' long-term sovereign debt rating by one notch to BB, maintaining a positive outlook

The current account deficit widened by 1.6 pps y-o-y to 3.8% of GDP in H1:17, mainly due to a large ship trade deficit



The unemployment rate declined to a 6-year low of 12.2% in 2016/17

SDR-denominated Suez Canal receipts set to post positive growth for the first time in 3 years in 2017/18, on the back of recovering global trade


Appendix: Financial Markets

Bi-Weekly Report 24 October - 6 November 2017