September 27 (SeeNews) - The World Bank said on Tuesday it has lowered its expectations for Macedonia's 2016 real economic growth to 2.0% from a previously forecast 3.7% due to the political crisis, in which the country has been locked since January 2015.
Macedonia's economy will expand by 3.3% next year driven by consumption and infrastructure investment, compared to a previous forecast for 4.0% growth, the World Bank said in its South East Europe Regular Economic Report. The report covers six countries of the region (SEE6) - Albania, Bosnia, Kosovo, Macedonia, Montenegro, and Serbia.
In 2015, Macedonia posted economic growth of 3.7%.
"Prolonged political uncertainty depresses economic activity, particularly private investment," the bank said in its report about Macedonia's macroeconomic development.
The World Bank added that Macedonia is the only country in the SEE6 region in which "investment is expected to limit growth; public investment has not been sufficient to compensate for the steep decline in private investment."
"The prolonged political uncertainty has weakened investment which— for the first time in six years—is subtracting from growth" in the country, the bank commented.
The bank foresees that consumer prices in Macedonia will remain nearly unchanged until the end of the year and in the next two years. According to data from Macedonia's statistics office, consumer prices fell by 0.3% on the year in August after decreasing at the same rate in July.
Lower income inflows and remittances caused a wider current account deficit in Macedonia, the World Bank said.
Credit growth stayed positive in Macedonia, although eroding confidence affected corporate lending in the first part of 2016, it added.
On the fiscal side, wages, pensions, and transfers have gone up markedly this year in Macedonia.
The Eurobond issuance earlier this year is expected to cover a large share of the financing needs of the country, replacing traditional domestic sources.
Details from the World Bank report follow:
|
2015 |
2016 |
2017 |
2018 |
Real GDP growth |
3.7 |
2.0 |
3.3 |
3.7 |
Consumer price inflation |
-0.3 |
-0.1 |
0.6 |
1.4 |
Public revenues (%/GDP) |
30.9 |
31.1 |
31.7 |
31.6 |
Public expenditures (%/GDP) |
34.5 |
35.2 |
35.1 |
34.6 |
Trade balance (%/GDP) |
-16.3 |
-16.4 |
-16.3 |
-15.9 |
Remittance inflows (%/GDP) |
2.1 |
2.2 |
2.3 |
2.3 |
C/a balance (%/GDP) |
-1.4 |
-2.1 |
-1.7 |
-1.4 |
FDI inflows (%/GDP) |
1.9 |
2.4 |
2.5 |
2.7 |
External debt (%/GDP) |
69.9 |
72.0 |
71.4 |
70.9 |
Unemployment rate (%) |
26.1 |
24.8 |
23.9 |
22.7 |
sources: Macedonian authorities, World Bank estimates and projections
The other economies in the region are expected to maintain growth of between 2.8% and 3.6% in 2016, the World Bank said.