Overwiew: economic situation in 2020

• GDP to drop by 1.5%; pre-COVID forecast: 5.5%
• Strong reduction of private consumption and investment counteracted by gov spending
• Budget deficit will amount to 5.0% of GDP, compared with pre-COVID plan of 2.3%
• Current account deficit at 8.6% of GDP, only slightly higher than pre-COVID 8.4%
• Strong decline in exports and remittances counterbalanced by large import contraction
• But: lower FDI and reversal of private capital inflows create problems for financing the current account deficit
• Augmentation of IMF stand by arrangement and immediate disbursement of USD 280 m key for financing both the budget and the current account deficit
• Rather stable exchange rate, after temporary depreciation by 5% in March 2020

Overview

• Economic growth at ca. 7.0% in 2019, significantly higher than expected
• Main driver was private consumption, on the back of robust retail lending
• Investment activity declined in 2019, with negative implications on mid term growth
• GDP is forecast to grow by 4.9% in 2020

Overview

• Economic growth in Q1 19 (7.2%) and Q2 19 (6.5%) significantly higher than expected
• Budget surplus in 7M2019 due to high revenues & under execution of capital expenditures
• Inflation forecast for 2019 at 2.1%; low inflation key ingredient of macroeconomic stability