May 6 (SeeNews) - The European Commission (EC) said on Wednesday it expects North Macedonia's economy to contract 3.9% in 2020 due to the coronavirus pandemic, and turn to 4% growth next year.
"In a most likely scenario, based on a gradual easing of restrictions and recovery of foreign demand, the economy would start to recover in the second half of the year, and continue to pick up in 2021," the EC said in its Spring 2020 Economic Forecast.
In the baseline scenario, which assumes that the economy would recover as of the third quarter, central government revenue is projected to drop by 25% in 2020 due to lower income from taxes and contributions. This will increase the country's debt levels more than previously expected, the Commission said.
Private consumption in the country is projected to decrease by 2.5%, but public consumption is seen growing by 2.7% this year.
The rate of unemployment is projected to rise to 18.1% in 2020 from 17.3% last year.
"In 2020, the consumer price index is expected to drop, compared to the preceding year, as the downturn reduces domestic price pressures, complemented by lower prices for energy and commodities. In 2021, price levels are projected to rise again, based on expectations of slightly firming domestic demand," the report reads.