Weekly Report 3-9 May 2016


Political and economic uncertainty on the rise, following PM Davutoglu’s resignation

Headline inflation declines to a 3-year low of 6.6% y-o-y in April, mainly on the back of a sharp downward correction in food prices



Fiscal performance deteriorates in 3M:16, with the 12-month rolling budget deficit widening to 1.7% of GDP from 1.5% in December



Significant fiscal consolidation in 3M:16, with the 12-month rolling budget deficit narrowing to 1.0% of GDP in March from 2.9% at end- 2015



Pro-Presidential Serbian Progressive Party remains in power, following a landslide victory in the April 24th parliamentary elections



Heightening domestic political uncertainty prompts the Central Bank to tighten its monetary policy stance

Current account deficit widens to 1.5% of GDP in February from 1.4% at end-2015, on a 12-month rolling basis, due to lower transfers



Significant fiscal consolidation in Q1:16, due to a strong revenue performance as well as primary expenditure restraint

Record low inflation strengthens the BoA’s hand to cut the policy rate by an additional 25 bps in May



A hung parliament expected in the May 22nd legislative elections

Customer deposit growth remains in positive territory in Q1:16

Banking sector deleveraging accelerates in Q1:16



Fiscal deficit widens in the first eight months of the fiscal year, due to a sharp increase in interest payments

A stand-by agreement with the IMF likely to be signed in early- 2016/17



Weekly Report 3-9 May 2016

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