Macro and Politics

* April Employment figures will be released @ 10:00 local time. The seasonally adjusted unemployment rate declined from 8.4% to 8.1% in March, while the broader underutilization measure that we closely monitor – the composite rate of labor underutilization comprising time-related underemployment, the potential labor force, and unemployment – rose markedly from 29.9% to 31.5%, reaching its highest level since June 2025. A breakdown of the components indicates that the combined rate of time-related underemployment and unemployment increased from 19.2% to 21%, while the combined rate of unemployment and the potential labor force edged down slightly from 20.5% to 20.4%. The rise in the broad underutilization measure to 31.5%, with levels hovering around 30%, points to a materially weaker labor market than implied by the headline unemployment rate. Given the expected drag on economic activity stemming from US – Iran tensions, we anticipate that the deterioration in broader labor market indicators will persist in the period ahead.

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the for the shortened May 22 – 26 period at 14:30 local time today. We expect today’s data to indicate that the decline in the CBT’s reserves continued, albeit at a slower pace. Based on our calculations derived from the CBT’s analytical balance sheet, we estimate that during the May 22 – 26 period, gross FX reserves declined by a further USD1.4bn to USD158.9bn, while net FX reserves fell by USD1.7bn to USD45.2bn. According to the data released yesterday for the previous week (May 15 – 22), foreign investors recorded net outflows of USD293.1mn from the equity market, while the bond market (excluding repo transactions) witnessed a net foreign outflow of USD334.8mn. Over the same period, residents’ FX deposits (excluding gold, EUR/USD parity effect adjusted) posted a limited increase of USD80mn, while residents’ total FX deposits (including gold, price-adjusted) registered a net increase of USD333mn. In terms of official reserves, the CBT’s gross FX reserves declined by USD8.4bn to USD160.3bn, while net FX reserves fell by USD5.1bn to USD46.9bn. The net reserves excluding swaps, meanwhile, decreased by USD8.4bn to USD28.7bn during the same period.