We sure do not desire a drastic increase in these rates within a short time frame. But given the low domestic savings rate, all you can do is to wait for your destiny.

I have not been writing about the credit statistics for a long time. The last observation in the datasheet on my computer that I constructed with the method the Central Bank uses (annualized rate of growth in thirteen-week average credit volume compared to the previous week) was for May. As of today, weekly figures for the early August are available. So I decided to update the database. When I did, however, I could not believe my eyes. Remember the Central Bank once declared that for financial stability the credit growth rate should not exceed 15 percent?

Here are the numbers: the credit growth rate for the first quarter of 2013 is 21.7, around 50 percent higher than that in the second half of 2012. “C'est la vie” you might say. But the rates for the following periods are even higher: 30 percent on average in the second quarter; 36.6 percent on average in the five-week period starting in July! Please do not get me wrong; the exclamation mark above does not reflect any judgment. I am not the one who uttered the “magical” 15 percent threshold, after all. And compared to the threshold, the figures require an exclamation. That’s it.

Concerning the unemployment rate, it is worth noting that its level increased slightly. The rate was rigid within the 8.9 percent – 9.2 percent interval between September 2011 and August 2011. It fluctuated between 9.4 and 9.6 percent in the September 2012-May 2013 period. Obviously this is not good news. It appears that unemployment rate will soon move up to the old point of rigidity at 10 percent.

Concerning balance of payments, actual financing was below the requirement in the previous two months. This will most likely be the case in the next couple of years. Basically, foreign borrowing “opportunities” will be limited, which will constrain the growth rate. In addition, we will be facing higher exchange and interest rates. We must start getting used to this. The critical problem is how much higher the rates will be and how long this will prevail. We sure do not desire a drastic increase in these rates within a short timeframe. But given the low domestic savings rate, all you can do is to wait for your destiny. So, let’s wish for the best!

Given these circumstances, what would be the outcome of the Monetary Policy Committee meeting on Tuesday? According to the Central Bank, there is nothing to worry about since the inflation target will be fulfilled in the medium-term, credit growth rate will decrease to a desired level by the mid-2014 and growth performance will be in line with the Medium Term Plan. I am aware of the “medium” inflation in the above sentence, but I am doing my best. I hope I will overcome this weakness in the medium-term!

This commentary was published in Radikal daily on 17.08.2013