In the fiscal year (FY) 2017/18 (ending June 2018), the economy grew by +5.4%, the highest growth rate in the last decade. And the economy rebalanced rapidly as the current account deficit decreased from -6.3% of GDP in FY 2016/17 to -2.5% in FY 2017/18. The overall political stabilization is still generating positive results; for example tourism receipts increased from USD4.4bn to USD9.8bn (about 4% of GDP). Moreover, the currency depreciation engineered in November 2016 (-50%) continues to benefit the economy through local production substituting imports; e.g. sales of locally assembled cars increased by +26% y/y in July. Further, gas output increases helped to end gas imports. Also, FDI inflows (USD7.7bn) fully covered the current account deficit last year. Along with foreign reserves still providing 8 months of import cover, it implies that the financial situation of the country is improving fast. Moreover, the unwinding of energy subsidies has helped to reduce the fiscal deficit (-7.9% of GDP) without causing too much inflation (14%). Growth should accelerate further to +6% in FY 2018/19.
