CAD hits 19-month low
account balance posted a THE CURRENT
USD 3.3bn deficit in February. The current account deficit (CAD) reached USD 9bn in February 2023. Therefore, the annualized CAD, which amounted to USD 31.8bn in February, has fallen to its lowest level since July 2022. The 2024-2026 Medium-Term Economic Program (OVP) forecasted the CAD at USD 34.7bn for this year.
Zooming in on details of the February reading, the services balance, which posted a USD 2.2bn surplus in 2023, recorded a surplus of USD 2.4bn. The net revenues from the travel item under this category totaled USD 2bn, while the goods balance, which ran a USD 10.5bn deficit in February 2023, posted a USD 4.8bn deficit in February 2024. The deficit in gold trade decreased from USD 3.8bn to USD 1bn in the same period.
As for financing items of the current balance, the direct investment inflow of USD 532m in February 2023 turned into the direct investment outflow of USD 142m one year later. The portfolio inflow totaled USD 4.4bn in February when government debt securities inflow amounted to USD 6.4bn and equity outflow hit USD 136m. As a result, the inflow totaled USD 2bn in February. The figure turned into an outflow due to another USD 5bn outflow from the net errors and omissions item. The CAD of USD 3.3bn paved the way for a USD 6.2bn decrease in the Central Bank’s reserves.
The preliminary foreign trade indicators for March showed that the monthly CAD may hover around USD 4bn, reducing the annual CAD to USD 30bn.
RATE CUT BY ECB IN THE PIPELINE
European Central Bank (ECB) President
Christine Lagarde stated that the bank will cut rates soon, barring any major surprises. Lagarde said there is a need to build a bit more confidence in the disinflationary process. She added that the bank is heading toward a moment when it needs to moderate its restrictive policy rate as long as there are no further shocks.
TRADE ACCELERATES IN FEBRUARY
The trade sales volume hiked by 1.3% in February, year-over-year. The wholesale trade sales volume rose by 5.7%, and the retail trade sales volume jumped 25.1% in the same period. Despite rate hikes and monetary
tightening measures, the pace of increase in retail sales saw 25%, the highest level in the last seven months, which is salient.
All sub-items of retail sales accelerated in February. Food, drinks, and tobacco sales soared from 9.5% to 13.5%, and computers, books, and telecommunications equipment sales skyrocketed from 36.3% to 56.0% in February compared to the previous month. Automotive fuel sales recorded the slowest increase at 4.6%.
House sales declined by one per thousand to 105,394 in March, compared to the same month of the previous year. Sales decreased by 1.3% to 279,604 units in January-March.
Mortgaged house sales fell by 49%, with a share of 12.2% in total home sales. Sales under the same category dropped by 53% in Q1.
On the other hand, new home sales surged by 4.6% to 34,399, bringing their share to 32.6% of total house sales. New house sales soared by 5.2% in January-March. Second-hand home sales declined by 2.2% in March and 4.0% in January-March.