Following its quarterly meeting of 18th and
The Bank's Board did not only reiterate the need for commercial banks to heighten loan recovery, especially those that were current prior to the pandemic through flexible repayment terms but also encouraged them to review their business models to mitigate the adverse effects of the COVID-19 shocks on financial soundness indicators to remain compliant with regulatory provisions.
It should be noted that these decisions were informed by developments in the global and domestic economies.
The global economic growth projection remained unchanged at 6.0% for 2021. However, differences across advanced economies, emerging markets, and developing economies are reflective of the divergence in monetary and fiscal policy responses to support recovery. Commodity prices during the period under consideration, including agricultural commodities (cocoa bean, round logs, rubber, and rice) declined, while non-agricultural commodities, including fuel and gold, recorded a significant rise.
Globally, inflation is projected at 3.5% in 2021, slightly above the 3.2% recorded in 2020, due mainly to the expected rebound in economic activity and the gradual improvement in commodity prices, especially oil. Inflation in advanced economies is expected to remain below target at 1.6%, while in sub-Saharan Africa, it is projected to moderate to 9.8%, slightly below the 2020 average.
Policy rates in selected advanced economies, on the other hand, were kept low, but relatively unchanged in
Domestic Macroeconomic Developments
Relative to the external sector, trade deficit widened to 5.5% of GDP, from a deficit of 1.7% of GDP recorded in the preceding quarter, reflective of the 21.2% rise in import payments and the 25.1% decline in export receipts during the quarter.
On the bright side, real gross domestic product (RGDP) growth is projected at 3.6% for 2021, expected to be propelled mainly by growths in mining and panning (4.6%), and agriculture & fisheries (3.8%). The service sector, which was the worst hit in 2020 due to COVID-19, is expected to recover, with a projected growth of 3.4% in 2021. This RGDP projection, however, may be hampered by the resurgence of the pandemic, especially in the economies of major trading partners.
The average inflation rate for quarter two moderated to 8.6%, from 11.1% in the previous quarter, mainly driven by the broad stability of the Liberian dollar, increased inflows of remittances, and the tight monetary policy stance of the Bank. Hence, the inflation forecast for quarter three is set at 8.5%, with a bandwidth of +/-2 percentage points. The foregoing economic developments prompted the Bank's
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