financial stability report - Banka Qendrore e RepublikÃ«s sÃ« KosovÃ«s

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Number 3 Financial Stability Report growth rate in the first half of Figure 8. The real GDP growth rate in SEE 2012. This decline in economic 5 activity is due to the fact that 3 countries in the region continues to 1 be sensitive to the developments in -1 the eurozone economies in terms of -3 trade, foreign direct investment (FDI), high share of foreign banks -5 and remittances. On the other -7 hand, IMF forecast for economic activity in 2012 indicate a slight increase of 0.5 percent of GDP 2009 2010 2011 2012 (Figure 8). Except Croatia and Source: IMF (2012) Serbia, all other countries are expected to have positive growth rate. On the other hand, the year 2013 is expected to be characterized with economic activity recuperation for all countries in the region with an average growth rate of GDP at 1.9 percent. The decline in economic activity in Figure 9. Current account deficit in SEE, in the region has resulted in percent deterioration of the labor market. 0 Recent estimates indicate an -5 average rate of unemployment in SEE of 26.8 percent, which is 0.9pp -10 -15 higher compared to the same -20 period of the previous year. The economy of Serbia continued to be -25 -30 characterized with a recession thus consequently marking the highest increase in unemployment compared to the same period of the previous year (2.9pp), followed by Source: European Comission (2012) Croatia and Montenegro (1.6 and 1.3pp, respectively). The average rate of current account deficit for the SEE countries in the first half of 2012 was 10.6 percent of GDP, which is almost the same level with the previous year. Montenegro, Bosnia and Herzegovina, and Serbia were characterized by increased rate of current account deficit compared to 2011, whereas other countries recorded deficit reduction (Figure 9). Montenegro, Bosnia and Herzegovina, and Kosovo continue to report the highest rates of current account deficit, while Croatia and Macedonia continue to be the countries with the lowest rates of the current account deficit. According to IMF projections for the year 2012, in almost all SEE countries are expected slower trend of growth in exports while imports are foreseen to decline. Export growth is expected to be 0.4 percent or 9.8pp lower than the growth recorded in 2011. The decline in imports is expected to reach 2.1 percent, whereas in 2011 imports had an increase of 6.9 percent. Current account deficit in the region deteriorated also as a result of the decline in current transfers in most countries of the region. On the other hand, also the balance of Foreign Direct Investment (FDI) has deteriorated, which is a very important component for the financing of the current account deficit. The average net FDI-to-GDP ratio stood at 5.0 percent, compared Kosovo Montenegro Macedonia B. and H. Albania Kosovo Montenegro Albania Serbia B. and H. Macedonia Serbia 2009 2010 2011 June 2012 Croatia Croatia 24 |
Financial Stability Report Number 3 with 5.8 percent in the same period of 2011. Concerning the individual countries, Montenegro, Kosovo, and Macedonia declined the FDI-to-GDP ratio (4.5, 4.2, 1.6pp, respectively), while Croatia, Serbia, Bosnia and Herzegovina, and Albania increased (1.2pp on average). The decline in economic activity has made some of the governments in the region to increase government expenditures in order to stimulate the aggregate demand in their economies, which was reflected in the deterioration of their budget balance. Serbia, Montenegro, and Albania were characterized by a faster growth of expenditures compared to the budget revenues, which led to deepening their budget deficit. The average rate of the budget deficit in SEE recorded an increase from 1.8 percent of GDP in the first half of 2011 to 2.4 percent of GDP in the first half of 2012. In June 2012, the highest rate of budget deficit was marked by Serbia (6.4 percent of GDP), followed by Montenegro (3.7 percent of GDP), Macedonia (2.2 percent of GDP) and Albania (1.6 percent of GDP). Conversely, Kosovo recorded a surplus of 0.5 percent of GDP, in June 2012. Consequently, during this period the average public debt in SEE is deepened, which reached at 38.5 percent of GDP, compared with 37.0 percent of GDP recorded at the end of the previous year. Albania and Serbia reported the highest public debt of 59.4 and 53.2 percent of GDP, respectively, while Kosovo continues to have the Figure 10. Annual average rate of inflation in SEE lowest level of public debt in the region with only 6.9 percent of 11 9 GDP. 7 During the first half of 2012, most of SEE countries were faced with 5 3 1 declined inflationary pressures -1 which mainly were a reflection of -3 decrease in oil and food prices. Average inflation for the first half of 2012 was 2.5 percent compared with an average of 5.8 percent 2009 2010 2011 Qeshror 2012 recorded in the same period of the Source: European Comission (2012) previous year. Serbia, Montenegro, and Croatia reported higher rates of inflation (4.4, 3.4, and 2.5 percent, respectively), Macedonia and Bosnia and Herzegovina reported an inflation level of 2.4 and 2.2 percent, respectively, while Kosovo and Albania, reported the lowest level of inflation of about 1.5 percent (Figure 10). Regarding the exchange rate between euro and currencies of the SEE countries, in June 2011 compared to the same period of the previous year, euro depreciated against Albanian lek by 0.8 percent (138.51 ALL / EUR), while appreciated against most of the other currencies in SEE. The highest appreciation was marked against Serbian dinar with 16.8 percent (115.8 RSD / EUR), then the Croatian kunas with 1.8 percent (7.54 HRK / EUR) and the Macedonian denar by 0.9 percent (61.52 MKD / EUR). Lending activity is characterized by a slight decrease of the growth trend, while deposits continued to be characterized by a higher growth rate compared to the first half of the previous year. Data for the first half of 2012 show that, with the exception of Montenegro where loans recorded decline, all SEE countries have increased the lending activity, but most of them with a lower growth rate compared to the same period of the previous year. Serbia Montenegro Croatia Macedonia B. and H. Kosovo Albania | 25
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financial stability report - Banka Qendrore e RepublikÃ«s sÃ« KosovÃ«s

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