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• After rising by 2.5% in 2011, real output growth is bound to slowdown this year, mainly reflecting weaker net exports and negative base effects from agriculture. Domestic demand is expected to take the lead as the primary driver of growth this year
• Inflation has declined to historically lows and is expected to ease further in the months ahead• NBR may cut rates one again this quarter, with a further 25bp rate reduction appearing possible by the end of the year• Attainment of this year’s fiscal target requires tough austerity measures to remain in place ahead of December 2012 national elections• The current account is expected to widen marginally this year on improved domestic demand and weaker growth in main trade-partner economies
• Market concerns shift to the sources of balance-of-payments financing; debt creating inflows have taken the lead as the main financing source of the current account