Maldives: Monthly Economic Review - April 2017

Transcription

1. MONTHLY ECONOMIC ECONOMICREVIEW REVIEW MONTHLY April 2017 April Volume2017 11 , Issue 4 Volume 11, Issue 4 Outlook for 2017 After a weaker than expected outturn in 2016, the real GDP1 growth is estimated to increase to 4.7% in 2017, from an estimated 3.9% in 2016. This is to be driven by the expansion of the construction sector, stemming from large infrastructure projects planned for 2017. Tourism sector is also expected to pick up pace in 2017, which will boost overall economic growth. The fiscal deficit2 is projected to decrease to MVR303.7 million (0.5% of GDP) in 2017 from an estimated MVR4.3 billion (7.4% of GDP) in 2016. Meanwhile, according to the balance of payments forecasts of March 2017, the current account deficit is projected to contract to US$650.5 million (16% of GDP) in 2017 from an estimated US$840.0 million (22% of GDP) in 2016. Tourism During March 2017, total tourist arrivals decreased by 2% in annual terms and totalled 112,665. Arrivals Key Tourism Indicators from both the European markets and the Asia and thousands Pacific region decreased in the review period. Decline 140 in the European market reflected a significant fall in 120 arrivals from some of the key European markets, 100 especially from the UK and Germany, which was 80 partly offset by a growth in arrivals from other major 60 European markets such as Russia, Italy and France. 40 Arrivals from the Asia Pacific region declined due to 20 a significant fall in arrivals from China. During the 0 annual percentage change 20 10 0 (10) 2015 month, the total bednights declined by 8% in annual Tourist arrivals (left axis) terms and the average duration of stay also decreased from 6.0 days in March 2016 to 5.6 days. Reflecting the annual decrease in bednights along with increase 2016 Growth in tourist arrivals (right axis) Growth in bednights (right axis) Source: Ministry of Tourism in operational bed capacity of resorts, the occupancy GDPprovides growth rates are based on market prices. This1report an update of developments in key economic sectors in March 2017, based on the latest available data as 2 According to the national budget for 2017 submitted to data, the Majlis. 30 April 2017. For more detailed information regarding the please refer to the Monthly Statistics published on our website. This report provides an update of developments in key economic sectors in March 2017, based on the latest available data as 30 April 2017. For more detailed information regarding the data, please refer to the Monthly Statistics published on our website. 2017
2. Monthly Economic Review April 2017 rate of the resorts dropped sharply to 68 % in March 2017 from 85% in March 2016. Fisheries In February3 2017, fish purchases made by fish processing companies totalled 2,675.9 metric tons. Fish Exports This represented a monthly and an annual decline of annual percentage change 60% and 28%, respectively. 400 350 During December4 2016, both the volume and earnings 300 of fish exports registered a marked growth. The 250 200 volume of fish export increased by 3.2 thousand metric 150 tons and the earnings from fish exports registered an 100 50 increase of US$3.8 million, in annual terms. The rise 0 in the volume of fish exports was mainly on account (50) of an increase in the volume of frozen yellowfin tuna (100) 2014 2015 Volume of fish exports 2016 and skipjack tuna exports. Meanwhile, the growth in Earnings from fish exports fish export earnings was largely due to an increase in earnings from frozen yellowfin tuna, frozen skipjack Source: Maldives Customs Service tuna exports and fresh or chilled skipjack tuna exports. In contrast, earnings from fresh or chilled yellowfin IMF Commodity Price Index tuna decreased during the period. annual percentage change 90 80 70 60 50 40 30 20 10 0 (10) (20) (30) (40) (50) (60) (70) Global Prices During March 2017, the International Monetary Fund commodity price index registered an annual increase of 24%, while it declined by 4% in monthly terms. The annual increase was driven by a surge in metal, food 2015 2016 2017 Total index Food index Metals index Petroleum index and oil prices. However, prices of such commodities decreased in monthly terms. The price of crude oil5 declined by 6% in monthly terms and stood at US$50.9 per barrel at the end of March 2017, albeit a growth of Source: International Monetary Fund 36% in annual terms. 3  Data relating to fish purchases was available only upto February 2017 at the time of compilation of this report. 4  Data relating to trade was available only upto December 2016 at the time of compilation of this report. 2 5  Monthly average of Brent, Dubai Fateh and West Texas Intermediate
3. Monthly Economic Review April 2017 Inflation Consumer Price Index The rate of inflation (measured by the annual percentage change in the Consumer Price Index [CPI]6) accelerated to 4.3% at the end of March 2017 annual percentage change 12 10 8 after registering 3.1% at the end of February 2017. 6 This was mainly due to the increase in prices of 4 staple food items; fish; tobacco and narcotics; and 2 increase in housing rentals and electricity price. As for the monthly percentage change in the CPI, it registered 0.7% in the review month compared with 0 (2) (4) (6) 2015 0.4% recorded in February 2017. This was mainly 2017 Total on account of increases in food prices; fish prices; Total excluding fish Food and non-alcoholic beverages excluding fish housing rentals; and prices of tobacco and narcotics due to the upward revision of import duty on this 2016 Source: National Bureau of Statistics category. Government Revenue and Expenditure millions of rufiyaa Public Finance According to monthly 2,500 government revenue and expenditure data7, total revenue (excluding grants) during October 2016 amounted to MVR1.2 billion, which was an annual increase of MVR143.9 million. Meanwhile, total expenditure (excluding amortisation) rose by MVR399.2 million in annual terms and amounted to MVR1.9 billion in October 2,000 1,500 1,000 500 0 2014 2015 Total revenue 2016 Total expenditure 2016. The increase in total revenue during October 2016 was entirely driven by strong tax revenues. This was Source: Ministry of Finance and Treasury largely owing to revenue from the newly introduced green tax8 as well as the increase in revenue from general goods and services tax. Meanwhile, non-tax revenue registered a decline which was mainly due to a decrease in resort lease period extension fees. As for the increase in expenditure, this was due to a 6  Inflation analysis is based on CPI data at the national level. 7  Data relating to public finance was available only upto October 2016 at the time of compilation of this report. Monthly income and expenditure data are subject to change and may vary from month-to-month as public accounting system data are updated regularly. Data for October 2016 was revised on 15 December 2016. 8  The green tax on tourists visiting Maldives was introduced during November 2015. 3
4. Monthly Economic Review April 2017 rise in both current and capital expenditure during the review period . The annual increase in capital expenditure mainly reflected the higher expenditure on the public sector investment program while the increase in current expenditure was mainly due to the rise in interest payments on government debt. Treasury Bills and Treasury Bonds Government Securities millions of rufiyaa 25,000 The total outstanding stock of government securities, 20,000 which includes treasury bills and treasury bonds, remained largely unchanged in monthly terms and 15,000 totalled MVR23.2 billion at the end of March 2017. 10,000 This reflected a fall in treasury bills investment by 4% (MVR598.6 million) which was offset by an 8% 5,000 (MVR670.9 million) increase in treasury bonds 0 2015 2016 2017 Treasury bonds Treasury bills investments. The monthly decrease in treasury bills investment was largely due to a decline in treasury bills investments by other financial Source: Maldives Monetary Authority corporations, while investment in treasury bills by Treasury Bills by Holder commercial banks also decreased slightly during the millions of rufiyaa month. Meanwhile, the increase in treasury bonds 16,000 investments by other financial corporations reflected 14,000 the conversion of part of the treasury bills held by 12,000 other financial corporations to treasury bonds during 10,000 the period. 8,000 6,000 In annual terms, the outstanding stock of government 4,000 securities registered a growth of 13%, owing to an 2,000 increase in the outstanding amount of both treasury 0 2015 MMA Source: Maldives Monetary Authority 2016 Others Commercial banks 2017 bills and treasury bonds, which rose by 5% and 27%, respectively. The growth in treasury bills was entirely contributed by an 18% increase in treasury bills holdings by commercial banks. Meanwhile, the growth in treasury bonds largely reflected the conversion of part of the treasury bills to treasury bonds. 4
5. Monthly Economic Review April 2017 Interest Rates of Treasury Bills Interest Rates of Treasury bills Treasury bills of all maturities continue to be issued under a tap system since they were reverted back in percent 12 10 8 the year 2014 . Since the rates on 28-, 91-, 182- and 6 364-day treasury bills were lowered to 3.50%, 3.87%, 4 4.23% and 4.60%, respectively in October 2015, it has 2 remained unchanged up until the review month. 0 2015 2016 28-day treasury bill 182-day treasury bill Broad Money The annual growth rate of broad money (M2) registered a decline of 5%, unchanged from the annual decline of 5% recorded at the end of February 2017, and stood at MVR30.9 billion at the end of the Marth 2017. This was mainly contributed by an annual decrease in the net foreign assets (NFA) of the banking system, largely owing to a fall in the NFA of the MMA. However, the decrease in NFA of the Source: Maldives Monetary Authority Determinants of Broad Money annual percentage change 25 20 15 10 5 0 (5) (10) (15) (20) 2015 banking system was partly offset by the increase in Monetary Base 2016 2017 Contribution of NDA to M2 growth Contribution of NFA to M2 growth net domestic assets (NDA), owing to investments in securities issued by public non-financial corporations. 2017 91-day treasury bill 364-day treasury bill Broad money growth Growth in claims on private sector Source: Maldives Monetary Authority Determinants of Monetary Base annual percentage change 60 The annual growth rate of the monetary base (M0) further decreased by 16% at the end of March 2017, after recording an annual decline of 14% at the end of February 2017, and amounted to MVR9.3 billion at the end of the month. The fall in M0 was driven by a significant annual decline in the NFA of the MMA which offset the annual growth in the NDA of the MMA. 50 40 30 20 10 0 (10) (20) (30) (40) (50) 2015 2016 2017 Contribution of NDA to M0 growth Contribution of NFA to M0 growth Monetary base growth Source: Maldives Monetary Authority 5
6. Monthly Economic Review April 2017 Monetary Operations The two main instruments available to the MMA to Monetary Operations absorb excess liquidity in the banking system are the millions of rufiyaa 4000 Overnight Deposit Facility (ODF) and the open market 3500 operations (OMO). However, the OMO continue to 3000 2500 remain suspended since May 2014 because the excess 2000 liquidity in the system is absorbed by the commercial 1500 banks’ continuous and persistent placement of these 1000 funds in the ODF. In March 2017, the total liquidity 500 0 2015 2016 2017 Average liquidity absorbed via ODF Average liquidity absorbed via OMO Source: Maldives Monetary Authority absorbed averaged MVR3.4 billion, which was a decline of MVR223.2 million and MVR350.8 million in both monthly and annual terms, respectively. Imports and Exports During December 20169, total merchandise exports Imports and Exports (f.o.b) rose by US$47.7 million in annual terms millions of US dollars and the expenditure on imports increased by 26% 250 (US$42.6 million). The growth in total exports was 200 a result of drastic rise in both domestic exports and re-exports. Domestic exports and re-exports rose by 150 US$3.7 million and US$44.0 million in annual terms, 100 respectively. The growth in domestic exports was 50 0 mainly driven by the rise in earnings from frozen 2014 2015 Exports 2016 Imports (cif) Source: Maldives Customs Service, Maldives Airports Company Limited, Gan International Airport skipjack tuna and yellowfin tuna as well as increase in fresh or chilled skipjack tuna exports, although the earnings from fresh or chilled yellowfin tuna decreased. On the other hand, the annual growth of import expenditure resulted from a significant increase in import of petroleum products, mainly diesel. The increase in import of machinery and mechanical appliances; transport equipment; electrical and electronic machinery and equipments also contributed to the annual growth in total imports. 9  Data relating to trade was only available upto December 2016 at the time of compilation of this report. 6
7. Monthly Economic Review April 2017 Gross International Reserves Gross international reserves (GIR) stood at US$501.2 million at the end of March 2017, of which usable Gross International Reserves millions of US dollars reserves10 amounted to US$224.7 million. During 800 March 2017, usable reserves increased by 5% in 700 monthly terms while it registered a decline of 10% in 600 annual terms. 500 400 300 Exchange Rate 200 100 With effect from 11 April 2011, the Maldivian rufiyaa 0 2015 was allowed to fluctuate within a horizontal band of Short-term foreign liabilities 20% on either side of a central parity of MVR12.85 per US dollar. However, immediately after the 2016 2017 Usable reserves Source: Maldives Monetary Authority introduction of the exchange rate band, the exchange rate of the rufiyaa per US dollar moved towards the upper limit of the band and since then it has remained virtually fixed at MVR15.42 per US dollar. Mirroring the movements of the US dollar against the currencies of major trading partners of the Maldives during March 2017, the rufiyaa appreciated in annual terms against the pound sterling, the Chinese yuan, the euro, the Singapore dollar and the Sri Lankan rupee while it depreciated against the Indian rupee. As for the monthly changes, the rufiyaa depreciated against euro, Indian rupee and the Singapore dollar while it largely remained unchanged against the Chinese yuan, the Sri Lankan rupee and the pound Bilateral Exchange Rates of the Rufiyaa annual percentage change 20 10 0 (10) (20) (30) 2015 2016 2017 Singapore dollar Indian rupee Sri Lankan rupee Sterling pound euro Chinese yuan Source: Bank of Maldives Plc sterling. 10  Usable Reserves = GIR – Short-term foreign liabilities. This shows the amount of funds that are readily available for use by the MMA in the foreign exchange market. This report is prepared by the Economic Research and Analysis Section of the MMA. For further enquiries please contact us at 3328028 or e-mail us at ersd@mma.gov.mv 7
8. MALDIVES MONETARY AUTHORITY Boduthakurufaanu Magu Male ’ - 20182 Republic of Maldives Tel: (960) 330 8679 Fax: (960) 332 3862 Email: mail@mma.gov.mv Website: www.mma.gov.mv