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Bi-Weekly Report 27 June - 10 July 2017

14/07/2017 - Reports

Southeastern Europe and Mediterranean Emerging Market Economies; --Weekly Report


Headline inflation declined for a second consecutive month in June, but remained in double digits (10.9% y-o-y)

The tourism sector is emerging from a deep crisis, due to the return of Russian tourists, as well as easing domestic security concerns and competitive prices



The 12-month rolling budget deficit widened to 2.6% of GDP in May from 2.4% at end-2016, due to tax cuts and a looser incomes policy

The FY:18 budget deficit could reach unsustainable levels, as a result of hikes in public sector wages and tax overhaul



Labour market conditions tighten in Q1:17

The residential real estate market maintained its strong momentum in Q1:17



Reform momentum to continue, following the endorsement of President Vucic's nominee for Prime Minister

The profitability of the banking system improved for a 3rd successive year in FY:16, due to lower NPL provisioning



Favourable trade and transfers in April helped reverse a 3-month deterioration in the current account

Headline inflation continued its upward trend for a 4th consecutive month, reaching 1.5% y-o-y in June



Economic growth strengthened to 3.9% y-o-y in Q1:17 from 3.5% in Q1:16, on the back of the improvement in the mining and construction sectors

Albania's electricity generation rose significantly in FY:16, as a result of favourable weather conditions



The current account balance (CAB) deteriorated sharply by 4.3 pps y-o-y to a deficit of 3.9% of GDP in Q1:17, mainly due to a large ship trade deficit

Headline inflation eased for a second consecutive month to 0.7%     y-o-y in June from a 4½-year high of 2.0% in April, due to favourable prices of energy and fruit & vegetables



Fiscal tightening is estimated to have reached 2.0 pps of GDP in FY:16/17, yet remains high at an estimated 10.5%

The envisaged fiscal consolidation of 1.5 pps of GDP for 2017/18 may require additional corrective measures


Appendix: Financial Markets