Bi-Weekly Report 28 August - 10 September 2018


Headline inflation rose sharply to a 14-year high of 17.9% y-o-y in August, mainly due to a sharp depreciation of the domestic currency

An aggressive hike to the key policy rate at the September MPC meeting is key to preserving macroeconomic and financial stability

GDP growth moderated to 5.2% y-o-y in Q2:18 from 7.3% in Q1:18, mainly due to heightening uncertainty ahead of the June 24th dual presidential and parliamentary elections



The 12-month rolling budget deficit widened to 3.4% of GDP in July from 2.8% in December, well above the critical 3.0% threshold



Stronger tax revenue helped offset upward pressures on current spending and public investment, keeping the 12-month rolling budget surplus at 0.9% of GDP in July, broadly unchanged compared with end-2017

Bulgaria's already low public debt is set to decline further in FY:18



GDP growth surprised on the upside for a second consecutive quarter in Q2:18 (4.8% y-o-y)

NBS to initiate a new cycle of monetary policy tightening in Q2:19



Banking sector ROAE (annualised) reached a record high of 21.3% in the first half of the year



Albania's electricity generation doubled in H1:18, as a result of abundant rainfall

A broadly neutral fiscal stance in 7M:18



The fiscal balance improved by 1.5 pps y-o-y to a surplus of 2.6% of GDP in 7M:18, due to a strong tax revenue performance and strict spending control

The recovery of real estate prices continued in Q1:18 (up 1.8% y-o-y)



GDP growth is estimated to have reached a 10-year high of 5.2% in FY:17/18

The tourism sector emerged from a deep crisis, mainly supported by a cheaper domestic currency and improved security conditions


Appendix: Financial Markets

Bi-Weekly Report 28 August - 10 September 2018