January 16 (SeeNews) - Italian financial group UniCredit revised down its estimate for North Macedonia's gross domestic product (GDP) growth in 2023 to 1.4% from 2.2% in 2022 due to the impact of high commodity prices, it said.
A squeeze in real income growth and weak demand from the country’s main trading partners will also impact GDP contraction, UniCredit said in a quarterly macroeconomic report on Central and Eastern Europe last week.
"Consumption growth will probably remain the main driver of GDP growth in 2023, but it is set to slow due to a squeeze in real disposable income and a deterioration in consumer confidence," UniCredit said.
In 2024, North Macedonia's GDP is expected to increase by 2.6%, driven by a pickup in consumption and investment.
Inflation will likely remain high in the first half of 2023, as utility prices are set to increase further. Inflation is expected to stay above 15% until May. Thereafter, it will likely decline gradually, reaching 5% by the end of 2024.
North Macedonia’s fiscal deficit is expected to narrow from 4.2% of GDP in 2022 to 3.7% of GDP in 2023, due to planned consolidation efforts. A further decline to around 3.3% is envisaged in 2024.
A precautionary and liquidity line (PLL) from the IMF should help North Macedonia cushion the impact of current shocks and increase financial buffer, UniCredit also said.