April 9 (SeeNews) - North Macedonia is expected to fall into recession due to the coronavirus outbreak with the economy projected to shrink by 0.4% in 2020 after growing 3.6% last year, the World Bank said.
This forecast has been made under the optimistic assumption that the crisis will end by end-June and the economy will be returning back to normal, the World Bank said in its Europe and Central Asia Economic Update Spring 2020.
However, the economy might end in a deeper recession of above 2% negative growth if the crisis gets prolonged beyond mid-2020.
Due to the coronavirus outbreak, personal consumption is expected to slow down in 2020, while exports and investments will decline. At the same time, the government will increase its spending in an attempt to boost the economy and to counter the crisis impact, thus increasing deficit and debt levels.
"A budget revision needs to reprioritize spending. Poverty reduction gains will likely be lost as firms defer to labor shedding in the most affected sectors (tourism, and manufacturing that contributed the most to poverty reduction in the past)," the World Bank said.
Growth is expected to recover in 2021 to 3.7% as personal consumption rises and private investments are restored. Poverty may resume its decline reaching 15.6% by 2022, the World Bank said.