Against the backdrop of a fragile recovery in the global economy, domestic economic activity remained sluggish during the month of August. Tourism output showed a modest upturn, supported by a rebound in the high value-added air segment of the market; however, indications are the performance of the construction sector remained lacklustre, given the softness in both foreign direct investment and domestic housing activity. Persistent weakness in tax revenue, combined with increased expenditure, led to a deterioration in the overall fiscal deficit. In monetary developments, both liquidity and external reserves declined, owing to net foreign currency outflows related to the traditional—though tempered—foreign currency demand to facilitate imports, as well as banks’ profit repatriations.
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