EBRD lowers Macedonia's 2017 GDP growth projection due to political crisis

EBRD lowers Macedonia's 2017 GDP growth projection due to political crisis Bradley Howard/CC BY 2.0

SKOPJE (Macedonia), May 10 (SeeNews) - The European Bank for Reconstruction and Development (EBRD) said on Wednesday it has revised its forecast for Macedonia's economic growth this year to 2.4% from 3% projected earlier. 

The lender lowered its projections due to the prolonged political crisis in the country, which has started to have a measurable negative impact on economic performance, the EBRD said in its latest Regional Economic Prospects report. 

Last year Macedonia's economic growth slowed to 2.4%, from 3.6% in 2014 and 3.8% in 2015. The main growth driver in 2016 remained the private consumption. The growth of net exports contributed positively. However, gross capital formation declined due to weak investments levels. 

"As a result, we are lowering our forecast for growth in 2017 to 2.4%, with a modest increase to 3% growth in 2018 on the assumption that the current crisis is resolved, unblocking further reforms and bringing much-needed investments," EBRD said. 

EBRD added that its forecast for Macedonia is subject to major downside risks, due to the current climate of uncertainty.

Since early elections held in December, the country is struggling to form a government. 

Back then VMRO-DPMNE won a narrow victory against SDSM and received a mandate to form a government. However, it failed to agree with ethnic Albanian party DUI on forming a government coalition.

In March, president Gjorge Ivanov announced that he would not give the mandate for the formation of government to Zaev despite the proof of parliamentary majority which Zaev had submitted to him, as he was concerned that SDSM's agreement with ethnic Albanian parties on the formation of a coalition cabinet would jeopardize the country's sovereignty. Those parties have pegged their participation in the future government to the acceptance of the so-called Tirana platform - a list of political demands they put forward following consultations with Albania's prime minister Edi Rama. 

At the end of April supporters of former prime minister and VMRO leader Nikola Gruevski stormed the parliament building following the election of Talat Xhaferi, member of the ethnic Albanians' DUI party, for parliament speaker. Three members of parliament, seventy citizens and twenty two policemen sought help in hospital after the attack, according to a police report. 

The EBRD projects that economic growth in Southeast Europe (SEE) will stand at 3.1% in 2017 and 3% next year.

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