Erste cuts N. Macedonia's 2023 GDP growth f'cast to 1.8%

Indicators show continued economic slowdown in the first three quarters of the year, mostly attributed to reduced personal spending due to higher living costs and increased loan expenses, along with a manufacturing slowdown from weakened external demand, Erste said in a research paper on North Macedonia’s macro-economic outlook.

A gradual recovery is expected in the medium term, with growth forecasted at 2.6% and 3.2% in 2024 and 2025, respectively.

The annual inflation rate is expected to average 10.1% in 2023 before falling to 4.5% in 2024 and 3.3% in 2025, as pressures on the supply side ease.

Fiscal space is very limited, burdened by domestic wage pressures and rising external cost of financing, the report reads.

In terms of politics, prolonged parliamentary impasse due to lack of consensus for constitutional changes and upcoming multi-elections in 2024 shape an uncertain political landscape, Erste analysts said.