In this month’s NOVA Monthly Economic Insights, we feature key happenings in the domestic economic landscape covering the following key points of interest:
Current Account: Deficit on the Run as Pressure Mounts
Currency and Reserves: FPI Outflows Escalate
Consumer Prices: Breakup in Supply Chain Marches Inflation Upwards
We expect current account deficit to spiral to $19.6 billion in 2020, exceeding 2019 level of $17.0 billion.
Assuming 100% of the offshore holdings are repatriated (which is a worst case scenario), and absence of BDC sales in April and May with a resumption of sales in June, the gross external reserves could end the year at $28.8 billion.
We expect the consumer price index to expand by 0.93% MoM, with headline YoY expanding to 12.36% YoY in March and we revised average inflation rate for 2020 to settle at 13.55% on our base case.
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