Bi-Weekly Report 29 May - 11 June 2018


The CBRT hiked its policy rates by 125 bps, bringing the total increase of its funding rate to 500 bps since April 25th

A significant slowdown in economic activity lies ahead after the Q1:18 strong growth performance (7.4% y-o-y)



Political uncertainty on the rise

The current account deficit remained contained in Q1:18 (3.4% of GDP on 4-quarter rolling basis)



Economic activity gained momentum in Q1:18 (up 3.5% y-o-y)

Labour market conditions tightened further in Q1:18, albeit at a slower pace compared with previous quarters



Activity accelerated to a post-global crisis high of 4.6% y-o-y in Q1:18



Disappointing growth in Q1:18 (up 0.1% y-o-y), due to a significant decline in investment

Labour market conditions tightened further in Q1:18, despite a poor growth performance



The banking sector's bottom line weakened slightly on an annual basis in Q1:18, but ROAE remained in double digits



The IMF Executive Board commended the country's strong macroeconomic performance, while stressing the need to reduce NPLs further and restart structural reforms

The unemployment rate returned to single digits, for the first time in 6 years, in Q1:18



GDP growth on track to reach a 10-year high of 5.2% this fiscal year (ending in June 2018)

FX reserves rose by USD 7.1bn to a record high USD 44.1bn in the first five months of 2018, supported by the solid implementation of the loan agreement with the IMF


Appendix: Financial Markets

Bi-Weekly Report 29 May - 11 June 2018