piraeus bank group

Economic Indicators Bulletin in Southeastern Europe - May 2013

  • The Bank of Albania (BoA) decided on May 29th to keep its key policy rate unchanged at the historically low level of 3.75%. The BoA estimates that its current monetary policy is sufficient to achieve the medium-term inflation target, as well as to stimulate domestic economic activity and demand.
  • Following the May 12th elections in Bulgaria, the former prime minister and leader of the GERB party, B. Borisov failed to form a government. Subsequently, the mandate passed to the second largest socialist party, the BSP, where S. Stanishev proposed a technocrat government led by P. Oresharski, a former Finance Minister. The new government was elected by the parliament.
  • According to the latest report on Cyprus from the International Monetary Fund (IMF), economic activity is expected to contract significantly by 8.7% YoY in 2013 and 3.9% in 2014. Economic recovery is expected in 2015, while a significant increase in the unemployment rate is estimated for the same years. The fiscal consolidation adopted by the Cypriot government since 2012 in addition to those measures included in the Memorandum of Understanding (MoU) are sufficient to maintain the sustainability of public debt and economic activity as well as to reduce the fiscal deficit.
  • The European Commission has proposed an extension that would allow Romania to further utilize EU funds. This extension is expected to support small-medium sized businesses, fund key infrastructure projects and tackle youth unemployment.
  • In the Concluding Statement of the Article V Consultation for Serbia, the IMF points out the significant economic challenges that the country faces, i.e. weak economic activity and large domestic and external imbalances. The IMF notes the significance of a new export oriented growth model. Significant and sustained fiscal consolidation, underpinned primarily by curbing mandatory expenditures, is needed to shrink public debt. Should inflationary pressures be curtailed; a gradual easing of monetary conditions could revive the anaemic credit growth.