Saturday, March 23, 2019

This week in monetary policy: Kyrgyzstan, Hungary, Nigeria, New Zealand, Kenya, Jamaica, Fiji, Czech Rep., Albania, South Africa, Egypt, Mexico, Bulgaria, Angola, Chile, Trinidad & Tobago and Dominican Rep.

    This week - March 24 through March 30 - central banks from 17 countries or jurisdictions are scheduled to decide on monetary policy: Kyrgyz Republic, Hungary, Nigeria, New Zealand, Kenya, Jamaica, Fiji, Czech Republic, Albania, South Africa, Egypt, Mexico, Bulgaria, Angola, Chile, Trinidad & Tobago, and Dominican Republic.
    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

MAR 24 - MAR 30, 2019:
COUNTRY                   DATE                     RATE                LATEST                    YTD              1 YR AGO
NEW ZEALAND27-Mar1.75%001.75%
CZECH REPUBLIC28-Mar1.75%000.75%
SOUTH AFRICA28-Mar6.75%006.50%
TRINIDAD & TOBAGO29-Mar5.00%004.75%
DOMINICAN REP.29-Mar5.50%005.25%

Friday, March 22, 2019

Paraguay cuts rate 2nd month in row, still data-dependent

     Paraguay's central bank lowered its policy rate for the second month in a row to ensure inflation moves towards its target as the latest economic data shows a deceleration in the pace of growth in parts of the economy.
     The Central Bank of Paraguay (BCP) cut its rate by another 25 basis points to 4.75 percent and has now cut it by 50 points this year following a cut in February.
     Since May 2016 BCP has cut its rate five times and by a total of 125 basis points.
     As in February, BCP said the next policy decision will depend on economic data, both internal and external, and its monetary policy committee was again unanimous in its policy decision.
     In its statement, BCP noted the downside risks in the international economy and the U.S. Federal Reserve's more conservative stance regarding the pace of monetary changes.
     Within South America, BCP said Argentina's economic situation remains complex although stabilization measures have been put in place while the economic recovery in Brazil is slower than expected.
     Inflation in Paraguay has mainly stabilized but remains at a low level, BCP said.
     Paraguay's headline inflation rate rose slightly to 2.7 percent in February from 2.4 percent in January but remains well below BCP's target of 4.0 percent.
     Earlier this month the International Monetary Fund said Paraguay's economy had grown rapidly in the past 15 years - an average of 4.5 percent -  helping reduce poverty, with prudent macroeconomic policies, low inflation and low fiscal deficits playing an important role,
     Going forward, the IMF said the key challenge will be to sustain this growth as the boom in agricultural commodities may provide less support going forward.
     Last year Paraguay's economy grew 3.75 percent, driven by strong domestic demand that was fueled by a rebound in credit growth, but growth was uneven as the economy was hit by spillovers from regional financial turbulence.
     Argentina's financial crises led to a risk aversion against the region, hitting Paraguay's guarani, although by less than the fall seen in Argentina's peso. The result was the guarani rose against the peso and Brazil's real, hitting tourism from those countries and trade.
     This year the IMF expects Paraguay's economy to expand around 3.5 percent, with a drought expected to reduce the soybean harvest but this should be partly offset by a pickup in tourism and trade as the exchange rate shocks from 2018 unwinds.
     IMF said BCP's monetary policy stance appeared appropriate, with inflation set to move back to 4.0 percent by the end of the year last year's rise in the guarani reverses.
     Against the U.S. dollar the guarani lost 5.9 percent in 2018 and it has continued to lose ground this year and was trading at 6,152 to the dollar today, down 3.3 percent this year.

Thursday, March 21, 2019

Norway raises rate 25 bps, next hike likely in 6 months

     Norway's central bank raised its policy rate for the second time in the current tightening cycle and said it was likely to raise it again during the next 6 months to curb inflation from faster-than-expected economic growth and a weaker krone.
     Norges Bank (NB) raised its key rate by 25 basis points to 1.0 percent and has now raised it by a total of 50 basis points since September 2018 when the rate was raised for the first time in 7 years.
      The rate hike was well-telegraphed after the central bank in December said it was likely to raise the rate today and continue to raise the rate as it unwinds its accommodative monetary policy stance.
     "Our current assessment of the outlook and balance of risks suggests that the policy rate will most likely be increased further in the course of the next half-year," NB Governor Oeystein Olsen said in a statement.
     In an update to its quarterly monetary policy report, the central bank raised its forecast for the policy rate over the next few years from its December report but lowered it slightly further out, with the upward shift reflecting stronger domestic demand and a weaker exchange rate of the krone.
     The downward revision of the rate path reflects the prospects for lower growth and a more gradual rate rise among Norway's trading partners, changes illustrated by the recent dovish shifts by major central banks, such as the U.S. Federal Reserve, the European Central Bank and the Bank of Canada.
     NB's policy rate is now seen averaging 1.1 percent this year, up from December's forecast of 1.0 percent, and 1.6 percent in 2020, up from 1.4 percent previously forecast.
     But for 2021 the rate is forecast to average 1.7 percent, down from 1.8 percent, and then remaining at that level in 2022.
     "The uncertainty surrounding global developments and the effects of monetary policy suggest a cautious approach to interest rate setting," Olsen said.
     While the global economy has slowed in recent months, Norway's oil-fueled economy has been expanding at a solid pace since 2016, with capacity utilization now slightly above normal.
     In the fourth quarter of last year, Norway's economy expanded by an annual 1.7 percent and NB's regional March survey this showed firms expect growth to remain firm over the next 6 months on higher oil investment, digitalization and high public investment.
     Illustrating the upward pressure on inflation from the strong economy, the survey showed rising capacity utilization and employment, with annual wage growth estimated of 3.0 percent.
     NB raised its forecast for economic growth in the mainland, which excludes the oil shelf in the North Atlantic, to 2.7 percent this year from a previous 2.3 percent and 2018's 2.5 percent, supported by steady increases in both household consumption and business investment.
     Investments in petroleum extraction and pipelines is especially strong this year, seen up 12.5 percent from last year, an upward revision by 2.0 percent.
     Further out, these oil-related investments are seen declining and lower growth abroad will weigh on Norway's economy.
     For 2020 NB sees overall economic growth in Norway of 1.8 percent, up from 1.6 percent, but then 1.2 percent in 2021, down from 1.4 percent, and 1.5 percent in 2022.
    Headline inflation in Norway has topped the central bank's 2.0 percent target since February 2018 and was steady at 3.5 percent for the second consecutive month in February. Core inflation jumped in February to 2.6 percent from 2.1 percent in the previous two months.
     A weaker than expected krone in 2018 has also put upward pressure on inflation.
     But over the last week the krone has reversed course and it received another boost following the Federal Reserve's forecast on Wednesday that it would keep the fed funds rate on hold this year and stop shrinking its balance sheet by October.
     The krone was trading at 8.44 per U.S. dollar today, up 3.2 percent this year.

Wednesday, March 20, 2019

US Fed holds rate, slashes forecast for hikes to 0 in 2019

     The U.S. Federal Reserve left its benchmark federal funds rate steady at 2.25 - 2.50 percent, as widely expected, but acknowledged economic activity has slowed and slashed its forecast for the rate path this year through 2021, with the rate seen on hold for the rest of this year.
     The Federal Open Market Committee (FOMC), the Fed's policy-making body, forecast the fed funds rate would average 2.4 percent this year, sharply down from December's forecast of 2.9 percent, which had implied 2 rate hikes this year.
      In 2020 the Fed expects to raise its rate once to an average of 2.6 percent, down from December's projection of an average rate of 3.1 percent, and then maintain this rate in 2021.
      After raising its rate 9 times since December 2015, the Fed shifted into a more dovish policy stance in early January following a sharp stock market sell-off in December.
     In January, when the Fed also kept its rate steady, the Fed said it was ready to adjust the pace of normalization of its balance sheet if economic conditions were to warrant an easier policy.
     Since October 2017 the Fed has slowly been shrinking its holdings of some $4 trillions of bonds by allowing $30 billion of Treasuries and $20 billion in mortgage bonds to mature every month.
     Today, the Fed said it would slow the redemptions of Treasury bonds to $15 billion a month and then stop the runoff at the end of September.
     As far as mortgage bonds, the Fed will let these bonds mature and then from October reinvest the principal payments into Treasuries up to $20 billion a month as it gradually meets its longer-term aim of primarily owning Treasury securities.
     In its statement, the FOMC said the labor market remains strong but economic activity has slowed from its solid rate in the fourth quarter of 2018, with data showing slower growth in household spending and business fixed investment in the first quarter.
     The U.S. economy began to slow toward the end of last year, with quarterly growth in gross domestic product down to 2.6 percent from the third quarter. On an annual basis, GDP still rose 3.1 percent in the fourth quarter, the 10th consecutive quarter of growth.
     As in January, the FOMC said it "will be patient" as it decides on future rate changes in light of global economic and financial developments and muted inflation pressures.
     Reflecting the impact on the U.S. economy from the slowdown in Europe and China, the Fed cut its forecast for economic growth this year to 2.1 percent from its previous expectation of 2.3 percent and the 2020 forecast to 1.9 percent from 2.0 percent.
     In 2021 growth is expected to decelerate further to 1.8 percent, as forecast in December.
     While economic growth still remains solid, inflation has been trending downward since mid-2018, with headline inflation of 1.5 percent in February, largely due to lower energy prices.
     As in January, the FOMC was unanimous in its policy decision.

UPDATE-Thailand maintains rate, lowers growth forecast slightly

     (Following report was updated with Bank of Thailand's forecasts)    
     Thailand's central bank kept its policy rate steady at 1.75 percent, as expected, saying it expects the country's economy to grow slightly slower than expected but it will still expand around its potential level as domestic demand will improve while slower global growth will dent exports.
     The Bank of Thailand (BOT), which raised its rate in December 2018 for the first time since August 2011, said overall financial conditions remain accommodative and conducive to economic growth while domestic consumption will continue to expand and inflation is in line with expectations.
     Last month BOT also left its rate on hold although two members of the monetary policy committee voted to raise the rate again by 25 basis points to curb risks to financial stability and create more policy space for the central bank to ease in the event of an economic downturn.
     Today's policy decision was unanimous.
     In today's statement, BOT said there were still risks to financial stability in the future that warrant continued monitoring but recent macro prudential measures and the higher policy rate would help curb the build-up of vulnerabilities in the financial system from the search for yield in a low interest rate environment that might lead to an underpricing of risks.
     Looking ahead, BOT said the "current accommodative monetary policy stance would remain appropriate" and it would continue to monitor growth, inflation and financial risks in deciding the appropriate policy in the period ahead.
     "In addition, given heightened global and domestic uncertainties in the current period, the Committee thus voted to keep the policy rate unchanged at this meeting to assess the clarity of impacts from such uncertainties," BOT said.
     On March 24 Thailand will hold its first general election since a military coup in 2014 under a new constitution that essentially gives the military more sway over future governments.
     BOT cut its 2019 growth forecast to 3.8 percent from December's forecast of 4.0 percent and forecast growth in 2020 of 3.9 percent. The forecast for export growth this year was lowered to 3.0 percent from 3.8 percent.
      Last month BOT Governor Veerathai Santiprabhob said Thailand's economy was expected to slow in the current quarter but it was still on track to meet the 2019 forecast of 4.0 percent.
      In 2018 Thailand's export-dependent economy grew 4.1 percent, the fastest pace in 6 years, with annual growth of 3.7 percent in the fourth quarter, up from 3.2 percent in the third quarter.
     While private consumption is expected to continue to expand, BOT said exports had grown at a slower pace than previously expected due to the global economic slowdown, a down cycle of electronic products and impacts of the trade protectionism measures between the U.S. and China.
     Thailand's headline inflation rate rose to 0.73 percent in February from 0.27 percent in January, well below BOT's target of 1.0 to 4.0 percent.
      In its latest forecast, BOT maintained its forecast for headline inflation of 1.0 percent this year, slightly down from 1.1 percent in 2018, and forecasts 1.1 percent for 2020.
     After rising from November last year to mid-February, Thailand's baht dropped this month and BOT said the exchange rate "would likely remain volatile due to both domestic and external uncertainties."
     The baht was trading at 31.7 to the U.S. dollar today, up 2.5 percent this year.

Tuesday, March 19, 2019

Morocco holds rate but lowers inflation forecast again

     Morocco's central bank left its monetary policy rate at 2.25 percent but again lowered its outlook for economic growth and inflation amidst a continued slowdown in the global economy and an uncertain outlook due to trade, geopolitical tensions and Brexit.
     The Bank of Morocco, or Bank Al-Maghrib (BAM), has kept its rate at the current level since March 2016.
      Morocco's inflation rate averaged 1.9 percent in 2018, up from 0.7 percent in 2017, but BAM expects headline inflation to average 0.6 percent this year before rebounding to 1.1 percent in 2020, driven by an expected rise in core inflation to 0.8 percent in 2019 and 1.4 percent in 2020 on an expected rise in domestic demand.
     In January Morocco's consumer prices fell 0.5 percent year-on-year, the first case of deflation since July 2017, due to lower prices of food and non-alcoholic beverages, and transport.
     Since June last year BAM has continuously lowered its inflation forecasts and in December it forecast 2.0 percent inflation for 2018, 1.0 percent for 2019 and 1.2 percent for 2020.
     Morocco's economy slowed more than expected last year, with gross domestic product in the third quarter up by 3.0 percent, down from 3.9 percent a year earlier, and BAM projected average 2018 growth of 3.1 percent, down from 4.1 percent in 2017.
     In December last year BAM forecast average 3.3 percent growth for 2018, down from June's forecast of 3.6 percent and September's forecast of 3.5 percent.
     The slowdown in growth was mainly centered on the agricultural sector, with valued added slowing to growth of 4.3 percent from 15.4 percent in 2017, while non-agricultural activities grew 2.9 percent from 2.7 percent.
      Overall growth this year was forecast at 2.7 percent and then 3.9 percent in 2020, down from December's forecast of 3.1 percent growth in 2019 but the forecast for 2020 is higher than the previous forecast of 3.6 percent.
     Morocco's exports of goods improved last year but imports were marked by higher energy prices and capital goods' purchases, expanding the current account deficit to 5.2 percent of GDP from 3.6 percent in 2017.
     This year the deficit is seen narrowing to 4.1 percent and then 3.4 percent in 2020 due to an expected decline in energy imports and a slowdown in capital goods' purchases.
      Foreign Direct Investment inflows reached the equivalent of 4.1 percent of GDP in 2018 and are expected to drop to 3.4 percent in 2019 and in 2020.
      Helped by Gulf states' grants of 2 billion dirhams in 2019 and 1.8 billion in 2020, along with expected international borrowings by Morocco's Treasury, net international reserves are seen rising to 239 billion dirhams in 2019 from 231 billion in 2018 before falling to 236 billion in 2020, the equivalent of just over 5 months of imports.
      The real effective exchange rate of the dirham is expected to appreciate by 0.7 percent this year but then depreciate by 0.5 percent in 2020, BAM said.
      In December the International Monetary Fund board approved a precautionary, 2-year, US$2.97 billion line of credit for Morocco - similar to three previous arrangements - to provide Morocco with insurance against external risks and support the government's plans to reduce fiscal and external vulnerabilities and promote higher and more inclusive economic growth.

Saturday, March 16, 2019

This week in monetary policy: Morocco, Thailand, Iceland, USA, Brazil, Indonesia, Philippines, Norway, Switzerland, Taiwan, UK, Russia, Paraguay & Colombia

    This week - March 17 through March 23 - central banks from 14 countries or jurisdictions are scheduled to decide on monetary policy: Morocco, Thailand, Iceland, United States, Brazil, Indonesia, Philippines, Norway, Switzerland, Taiwan, United Kingdom, Russia, Paraguay and Colombia.
    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

MAR 17 - MAR 23, 2019:
COUNTRY                   DATE                     RATE                LATEST                    YTD              1 YR AGO
UNITED STATES20-Mar2.50%001.75%
UNITED KINGDOM21-Mar0.75%000.50%

Friday, March 15, 2019

Azerbaijan cuts rate 6th time, inflation now seen in range

     Azerbaijans's central bank lowered its benchmark refinancing rate by another 25 basis points to 9.0 percent but signaled that it may pause in further easing as inflation is now forecast to settle within the target range in 2019.
      It is the Central Bank of the Republic of Azerbaijan's (CBA) 6th rate cut since February 2018 and its policy rate has now been lowered by a total of 600 basis points since then.
      In February, when the rate was cut by 50 basis points, CBA said it would continue to normalize monetary conditions but today it said recent monetary easing had contributed to the normalization of monetary conditions and rising domestic demand is expected to help narrow the output gap.
     "The Central Bank will adjust the parameters of the interest rate corridor in response to actual and forecasted inflation rate and the realization of risk scenarios," CBA said, adding today's rate cut lowers the ceiling of the interest rate corridor to 11 percent and the floor to 7.0 percent.
     Azerbaijan's inflation rate has tumbled since mid-2017 when it hit 14 percent and decelerated faster than expected in 2018, triggering CBA's rate cuts as its main priority is to keep inflation within the target range and promote economic activity.
      CBA lowered its inflation target for 2019 to 4.0 percent, plus/minus 2 percentage points from last year's target of 6-8 percent.
      But CBA said inflation in February ticked up to 2.1 percent for average inflation in the first two months of 1.9 percent, still close to the lower level of CBA's target range.
      CBA said inflation expectations had been stable but the most recent inflation outlook suggests structural changes in the balance of risks, with inflation expectations now anchored at a low level due to a stable exchange rate, anti-inflationary monetary conditions and a balance of payments surplus.
     However, CBA cautioned there are still uncertainties related to external factors, such as volatile oil prices, slower global growth and higher commodity prices. Azerbaijan's economy remains heavily dependent on oil.
     The external environment remains favorable, CBA said, noting exports had risen 42.6 percent in the first two months of the year, including a 16.4 percent rise in non-oil exports, resulting in a trade surplus of US$986.3 million.
     Foreign exchange reserves have also risen 4.1 percent this year to $46.6 billion and the economy grew 2.9 percent year-on-year in January while business confidence has improved in non-oil processing and trade while it has declined in construction and services in the last 2 months.
    The exchange rate of Azerbaijan's manat has been largely steady since mid-2017 around 1.70 to the U.S. dollar.
    Following the fall in crude oil prices in mid-2014, the manat came under heavy pressure as local depositors began switching into U.S. dollars. At that point, the manat was effectively pegged to the U.S. dollar so the CBA had to draw on its reserves to defend it.
     But by early 2015 the CBA was forced to abandon its dollar-peg and then later that year it also abandoned a dollar-euro basket peg.
     In December 2015 the CBA then switched to a floating exchange rate regime that finally helped stabilize the exchange rate. 

Thursday, March 14, 2019

BOJ keeps stance, expansion goes on despite slowdown

    Japan's central bank left its monetary policy stance unchanged, as expected, but acknowledged the country's exports and industrial production have been affected by the global economic slowdown.
     But the Bank of Japan (BOJ) still expects the economy to continue its "moderate expansion" despite the slowdown in overseas economies as domestic demand trends upward, helped by government spending.
     "Although exports are projected to show some weakness for the time being, they are expected to be on a moderate increasing trend on the back of overseas economies growing moderately on the whole," BOJ said.
     In today's statement, the BOJ's policy board confirmed its monetary policy of controlling the yield curve that has been in place since September 2016 - Quantitative and Qualitative Easing with Yield Curve Control (QQE) - and this policy would continue until inflation reaches its 2 percent target.
     In its outlook for economic activity and prices from January, the BOJ lowered its inflation forecast for the fourth time, with inflation excluding fresh food seen rising only 0.8 percent in fiscal 2018, which ends this month, down from October's forecast of 0.9 percent.
    In January Japan's core inflation rate edged up to 0.8 percent from 0.7 percent in December.
    Consumer prices in fiscal 2019, excluding the impact of the consumption tax hike, are seen rising 0.9 percent, down from 1.4 percent previously forecast, due to lower oil prices, and for fiscal 2020 inflation is seen at 1.4 percent, down from 1.5 percent.
     Japan's economy is expected to continue to expand around its potential rate, with growth in fiscal 2018 hit by natural disasters last summer.
     The estimate of gross domestic product growth in fiscal 2018 was lowered to 0.9 percent from October's forecast of 1.4 percent.
     GDP grew 0.5 percent in the fourth calendar quarter of 2018 from the third quarter for annual growth of 0.3 percent, up from 0.1 percent in the third quarter.
     For this coming fiscal year, the forecast for growth was revised up to 0.9 percent from a previous 0.8 percent, and for fiscal 2020 growth is seen at 1.0 percent, up from 0.8 percent.
     After falling from March 2018 to December, the yen rose strongly in late December but has given up some of those gains this year. Today the yen was trading at 111.8 to the U.S. dollar, down 1.3 percent this year.
      As part of its monetary policy, the BOJ reiterated it would maintain a negative interest rate of minus 0.1 percent on banks' deposits that exceed reserve requirements along with the purchase of government bonds of around 80 trillion yen in order to keep 10-year government bond yields around 0 percent.
       As part of its QQE policy, the BOJ also purchases Exchange-Traded-Funds (ETFs) and real estate investment trusts (J-REITs) so the outstanding amounts increases at an annual pace of about 6 trillion and about 90 billion yen, respectively.

Ukraine holds rate, switch to easing depends on inflation

     Ukraine's central bank kept its policy rate at 18.0 percent due to risks that inflation may not decline but said it may adopt a monetary easing cycle in the future and how soon depends on how steadily the risks of inflation ease and inflation expectations improve.
     "Looking ahead, any changes to the key policy rate will be based on the NBU's updated macroeconomic forecast that will be published in April," the National Bank of Ukraine (NBU) said.
    Ukraine's central bank moved into a monetary tightening cycle in October 2017 and raised rates 6 times by a total of 550 basis points until September 2018. Since then rate has been unchanged.
     But despite tight monetary condition, which helped boost the hryvnia's exchange rate, inflation remained above the NBU's end-2018 target of 6.0 percent, plus/minus 2 percentage points, due to an array of  factors such as higher administered prices and pensions, higher tariffs and oil prices, along with strong consumer demand and higher wages.
     By the end of 2018 headline inflation had only eased to 9.8 percent but in the last two months inflation has fallen and reached 8.8 percent in February, "signifying that the underlying inflationary pressure is easing off as anticipated," NBU said.
     However, the central bank said continued tight monetary conditions are still an important prerequisite for gradually lowering inflation to its target of 5.0 percent in 2020.
     In its January inflation report, NBU forecast inflation would ease to 6.3 percent by the end of 2019 and then decline to the upper bound of its target range of 5.0 percent, plus/minus 1 percentage point, early next year before reaching the midpoint target by the end of the year.
     NBU said this forecast still holds although an increase in social payments and higher utility tariffs are planned, which could boost inflation expectations. On the other hand, the hryvnia's has strengthened more than expected, helping curb inflation.
     Administered prices are set to rise 13.6 percent this year, mainly due to an increase in natural gas tariffs for households as part of the agreement with the International Monetary Fund. (IMF). In the medium term, the rise in administered prices slows to 10 percent in 2021.
     Since September last year the hryvnia has steadily strengthened and today it was trading at 26.88 to the U.S. dollar today, up 2.4 percent this year.

Wednesday, March 13, 2019

Georgia cuts rate 2nd time and raises RRR for FX funds

     Georgia's central bank lowered its benchmark refinancing rate for the second time in a row and said "further easing of the moderately tight monetary policy will depend on how fast the output gap will close."
    The National Bank of Georgia (NBG), which in January also cut its rate and said it expects to reduce the rate further this year, also reiterated that inflationary pressures are still weak and  inflation is forecast to remain within the target level of 3.0 percent in the medium term.
     But to "mitigate possible future financial stability risks," the NBG said it was raising the minimum reserve requirement for funds in foreign currency deposits by 5 percentage points.
     NBG cut its rate by another 25 basis to 6.50 percent and has now cut it by 50 basis points this year  and by 75 basis points since July 2018 when it first began exiting from moderately tight monetary policy as external risks eased along with domestic demand and thus inflationary pressures.
     In January NBG's president, Koba Gvenetadze, told Reuters the central bank would lower its rate to between 5 and 6 percent over the next two years.
    In February Georgia's headline inflation rate rose slightly to 2.3 percent from 2.2 percent in January while the positive trends seen in the external sector since the start of this year were continuing with exports growing at a high rate while imports are only growing modestly, resulting in a narrower current account deficit, NBG said.
    And while retail lending has slowed, NBG said business lending was up.
    In the third quarter of last year, Georgia's gross domestic product slowed to annual growth of 3.7 percent from 5.6 percent in the previous quarter.
     The exchange rate of the lari fell sharply in the second half of last year but has been more stable this year although it has weakened in the last month. Today the lari was trading at 2.69 to the U.S. dollar today, largely unchanged since 2.68 at the start of this year.
     In December the International Monetary Fund (IMF) forecast Georgia's economy would grow 4.6 percent in 2019 after 5 percent last year with inflation averaging 3.1 percent this year after 2.8 percent in 2018.