Bi-Weekly Report 26 February - 11 March 2019
Turkey
Headline inflation declined to a 4-month low of 19.7% y-o-y, mainly due to weak domestic demand and less unfavourable food prices
The CBRT is likely to maintain its key policy rate on hold at 24.0% at least until May, before initiating a new cycle of monetary policy easing
Buoyant tourist activity contributed significantly to the strong external adjustment in 2018
Romania
The current account deficit reached a 6-year high of 4.7% of GDP in FY:18 against 3.2% in FY:17, on the back of stronger domestic demand
The CAD is set to widen further to an alarming 5.2% of GDP in FY:19
Bulgaria
Weaker external demand from outside the EU, combined with stronger domestic demand and higher global oil prices, pushed down the current account surplus to 4.6% of GDP in FY:18 from an upwardly-revised 6.5% in FY:17
Bulgaria is set to remain the best performer in the region, despite the expected sharp decline in the current account surplus to 2.5% of GDP in FY:19
Serbia
GDP growth rebounded to a post-global crisis high of 4.3% in FY:18 from 2.0% in FY:17
GDP growth is set to moderate to a still high 3.6% in FY:19 -- remaining above its long-term potential of 3.5% for a 2nd successive year
North Macedonia
The current account deficit shrunk to a 13-year low of 0.3% of GDP in FY:18, due to a significant improvement in the trade balance
Large (net) FDI inflows and Eurobond proceeds brought FX reserves to a record high of EUR 2.9bn in FY:18
Albania
Political turmoil jeopardises the opening of EU membership negotiations
The banking sector's ROAE weakened to a still solid 13.0% in FY:18
Cyprus
The 2018 Budget would have met its surplus target of 2.9% of GDP had it not been for the one-off EUR 1.7bn (8.1% of GDP) fiscal burden from the sale of Cyprus Cooperative Bank to Hellenic Bank
Fiscal prudence to continue this year
Egypt
Credit to the private sector (FX-adjusted) picked up for a third consecutive quarter in Q2:18/19, on the back of stronger loan supply and demand
Customer deposits (FX-adjusted) lost momentum for a third successive quarter in Q2:18/19, due to lower EGP remuneration rates and strong base effects
The unemployment rate is set to return to single digits this fiscal year (ending in June)
Appendix: Financial Markets