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Consumer
prices rise amid healthy economic growth
In September, consumer prices increased 0.63%. The September reading
was slightly above Consensus Forecast expectations, which had consumer
prices rising 0.56%. Notable increases in clothing and education
prices accounted for the September rise, as prices on most other goods
remained subdued. As a result of the September reading, the annual
inflation rate rose from the 5.3% in August to 5.9%. The September
inflation figure continues to be below the target range of 7% to 11%
underlying the Central Bank’s monetary policy programme for this year.
Nevertheless, Consensus Forecast participants expect inflation to
accelerate to 6.8% by the end of the year. Next year inflation is
expected to rise further to 7.7%, despite the slowdown in economic
activity, as accelerated currency depreciation is likely to exert
additional pressure on prices.
Current
account surplus shrinks in second quarter
In the second quarter, the current account balance recorded a surplus of
US$ 1.7 billion. The surplus was significantly above the US$ 269
million surplus registered in the preceding quarter but below the US$ 2.8
billion surplus observed in the second quarter last year. The
decline over last year was the result of a higher deficit in the incomes
balance, which widened from US$ 1.9 billion in the second quarter last
year to US$ 2.2 billion this year. Similarly, the trade surplus
narrowed from US$ 4.9 billion in the second quarter 2003 to US$ 4.1
billion in the second quarter of 2004.
The
capital account surplus widened in the second quarter to US$ 1.2 billion
from US$ 409 million the prior quarter and from a US$ 650 million deficit
for the same quarter last year. As a result of the twin surplus in
both the current and capital account, international reserves increased US$
2.6 billion the second quarter, up from the US$ 884 million the prior
quarter. Nevertheless, the annual current account surplus dropped
from US$ 5.8 billion in the first quarter to US$ 4.6 billion in the
second. Consensus Forecast panellists maintain that the current
account surplus will widen through the end of the year to reach US$ 5.1
billion, down from the US$ 5.8 billion expected last month.
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