Though economic activity is expected to improve this year through the energy and non-energy sectors global growth remained constrained for the first half of 2023.
In its economic bulletin on Monday, the Central Bank said the reason for constraint is the geopolitical tensions and continued monetary policy tightening to contain inflation.
Preliminary indicators suggest that domestic economic activity dipped in the last quarter of 2022 before improving over the first quarter of 2023 as shown by eased prices of food and non-food items.
The central government's fiscal position also strengthened during the first eight months of the fiscal year 2022/2023 through higher revenues from the energy sector.
It said the ample liquidity supported robust credit growth during the first half of 2023 while excess liquidity increased to a daily average of $6.2 billion over January-July 2023, compared to $4.4 billion over the same period last year.
The repo rate also remained unchanged at 3.5 per cent during the first half of 2023, in support of the domestic economic recovery.
Gross official reserves amounted to US$6,461.5 million at the end of July 2023, equivalent to 8.1 months of import cover.
It added that natural gas supplies should continue to benefit from the key upstream energy-sector projects while non-energy-sector performance will be driven by increased business activity and the continued resurgence of consumer demand.
Headline inflation is expected to continue declining in the short term, driven by the easing of food inflation as international food prices drop.