A faster economic recovery is restrained by quarantine restrictions and the situation in the country's energy sector, where the reduction in oil production under the OPEC+ agreement (-10% y/y) remains and a strong decline in investments (-48% y/y) is observed.
With the global demand recovery, oil production in the country slightly increased in the first quarter of 2021 compared to the previous quarter, while the decline in production in annual terms is still measured by a double-digit figure of 10%.
During the first quarter, the National Bank was keeping the base rate and interest rate corridor of liquidity management at the same level. The current monetary policy terms were primarily kept due to the fact that inflation on foods remained at a high level. Besides, the regulator noted a rise in prices for fuels and lubricants and high inflation rates in the countries-trading partners. An increase in budget expenditures and targeted transfer growth will create pro-inflationary pressure on the economy and restrain the National Bank from softening its monetary policy throughout 2021.
Photos are from open sources.