Weekly Report 19-25 January 2016

Dollarization of deposits accelerates in 2015, reflecting increased uncertainty

Although loan growth (FX-adjusted) slows in 2015 (up 12.9% against an increase of 16.0% in 2014), the banking sector’s liquidity shortfall continues to grow

Current account deficit widens to 0.8% of GDP on a 12-month rolling basis in November from 0.6% at end-2014, in line with stronger domestic demand

Current account surplus remains high at 1.0% of GDP, on a 12-month rolling basis, in November

Tourist arrivals decline for the first time in six years (down 1.2% y-o-y in 11M:15)

Banking system profitability improves, on an annual basis, in Q3:15

Deflation remains broadly unchanged at -0.3% y-o-y in December compared with -0.5% a year earlier

Customer deposit growth, albeit moderating, remains strong in 2015

Credit to the private sector maintains momentum in 2015

Economic growth strengthens to 3.0% y-o-y in Q3:15

Tourist arrivals exceed the 2.6mn mark in 2015, for the first time since 2001

A disappointing start to the year on the fiscal front, with the 12-month rolling (underlying) deficit remaining unchanged at the unsustainable level of 12.5% of GDP in the first 4 months of the new fiscal year