Domestic economic conditions remained challenging during the review month, reflecting continued weakness in the major tourism sector, which offset steady gains in capital formation provided by various foreign investment-led construction activities.
However, with the spill-over effects remaining narrowly based, the impact on employment conditions was minimal. Price developments exhibited a slowing in inflation over the twelve-months to July, reflecting the pass-through effects of lower global oil prices.
On the fiscal side, mildness in economic activity and the normalization of collections contributed to a downturn in tax revenues which, together with a rise in current spending, fostered a widening in the fiscal deficit during the eleven months of FY2012/13.
In the monetary sector, both liquidity and external reserves trended moderately lower in July, amid some gains in private sector credit, with credit quality indicators registering mild improvement.
