November 9 (SeeNews) - The European Commission said on Wednesday it has revised down its projections for Macedonia's economic growth this year to 2.7% from 3.5% forecast in May due to the extended political crisis in the country.
"... GDP growth slowed down markedly in the first half of 2016 (2.1% annualised), largely on account of weak investment expenditure and a slowdown in private consumption growth, reflecting a protracted political crisis," the Commission said in its Autumn 2016 Economic Forecast report, published on the Commission's website.
"While labour market conditions improved further, and real net wages, supported by lingering deflation, continued to post solid gains, disposable income was negatively affected by weak private transfers from abroad," the Commission added.
The European Commission expects economic growth to recover to 3.2% in 2017 on the back of a renewed surge in investment and robust household spending, provided the political crisis recedes after the December 11 elections.
The Commission also projects a modest rise in price pressures in 2017.
Brussels also expects higher services surplus and improved trade balance in 2017 and 2018 thanks to increased production capacities by foreign companies and recovery of demand in major trade partner economies. It, however, underlined that these projections are subject to downside risks, if the political crisis continues.
The Commission noted that the government's intentions to reduce the budget deficit to 2.2% by 2019 are unrealistic considering the absence of specified consolidation measures.
"With primary balances remaining elevated, debt stabilisation during the forecast years is unlikely," the Commission also said.
Details follow:
|
2016 |
2017 |
2018 |
GDP growth (annual % change) |
2.1 |
3.2 |
3.3 |
Private consumption |
2.4 |
2.5 |
2.5 |
Gross fixed capital formation |
1.8 |
3.5 |
4.0 |
Unemployment (as % of total labour force) |
24.4 |
23.2 |
22.2 |
C/A balance (as % of GDP) |
-2.2 |
-1.7 |
-1.6 |
Trade balance (as % of GDP) |
-20.7 |
-20.8 |
-19.9 |
Consumer price inflation |
0.1 |
0.9 |
2.4 |
In 2015 Macedonia's economy expanded by 3.7%.
Earlier this month, the European Bank for Reconstruction and Development also lowered its forecast for Macedonia's economic growth to 2.1% from 3.2% previously.
In October, the International Monetary Fund cut its projection for Macedonia's GDP growth to 2.2% from 3.6% in April.