Economic Monitor

Economic Monitor Issue 05 [updated] | June 2021

Overview

  • 2020: economic growth of 1.6% despite pandemic
  • 2021: return to high growth of 5.0%
  • Strong increase of investments (7.0%) and services (7.7%) expected in 2021
  • Decreasing inflation from ca. 11% by end 2020 to single digit by end of 2021
  • Real wage growth slowed down during pandemic, but is expected to speed up again in 2021
  • Stable exchange rate vs the US dollar in 2021 and very high international reserves
  • Growth of remittances by 37% in 6M 2021 indicates recovery of migrants’ host countries
  • Budget deficit with 4.4% of GDP in 2020 lower than expected, 5.5% forecast for 2021; no threat to fiscal sustainability
  • Strong recovery of trade: imports increased by 15%, exports by 44% (without gold) in 6M 2021
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Economic Monitor Issue 04 | January 2021

Overview

  • Main reason for economic slowdown: lower investment
  • Positive contributions to GDP of government consumption (+3.6% yoy) and agricultural sector (+3.0% yoy)
  • 2021: GDP forecast to pick up by 5.0%
  • Inflation declined to ca. 11% by end 2020 and opened space for CBU to decrease its policy rate by 2 pp to currently 14%; CBU targets an inflation of 5% by end 2023
  • Depreciation of Sum by 8.5% vs USD in 2020 in line with inflation
  • International reserves (gold and FX) increased to USD 32.9 bn or 14 months of imports; main reason: higher gold price
  • Current account deficit below 6.4% of GDP in 2020 due to rise in remittances
  • Exports down by 6%; gold exports compensated decrease of other items; imports dropped by 9%
  • Budget deficit increased to high 7.5% of GDP in 2020, but no threat to fiscal sustainability
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Economic Monitor Issue 03 | June 2020

Overview

  • 2020: positive growth of 1.5% despite COVID-19
  • Without the pandemic, growth would have been 6.0%
  • Strong increase in government spending to support the economy
  • Agriculture hardly affected by quarantine measures, growth of 2.6% expected
  • Slight decline of inflation
  • Sum depreciated by 6% against the USD in January-May 2020 as exports and remittances declined
  • High international reserves of USD 31.3 bn (May 2020) – 14 months of import coverage
  • Current account deficit expected to rise to 9.6% of GDP in 2020
  • FDI inflows will fall to 1.2% of GDP in 2020, after 3.9% in 2019
  • Budget deficit will increase to 5.6% of GDP in 2020
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Economic Monitor Issue 02 | February 2020

Topics:

  • Pharma park and cluster. Roadmap presented to government
  • Reform of state-owned enterprises. Important future reform area
  • Energy sector. Investment in infrastructure and energy generation needed
  • Doing Business Index. Progress in improving investment and business climate
  • SME support. Rethinking of SME funding policy necessary
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Economic Monitor Issue 01 | August 2019

Topics:

  • Development Strategy 2017 2021: Implementation of comprehensive reform agenda in 5 key areas
  • Tax reform: Positive implications for investment and business climate, but also for the state
  • Banking sector: Reforms in this state dominated sector are indispensable
  • Export potential of textile products: Identification of promising products
  • Reform of free economic zones: Cluster approach offers the chance to increase effectiveness
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