SKOPJE (North Macedonia), April 5 (SeeNews) – North Macedonia should put emphasis on economic reforms to reignite EU convergence process and stabilize public finances, as the political outlook improved, the World Bank said on Friday
The successful resolution of the name dispute with Greece and the ensuing unblocking of the EU membership process provide a stimulus for growth and reforms, the World Bank said in an Economic Update for Europe and Central Asia.
Economic growth rebounded to 2.7% in 2018, from 0.2% in 2017 driven by consumption and net exports, while investment started recovering, the bank said, adding that unemployment fell to a historical low, while wage pressure continues.
Economic growth is expected to further accelerate to 2.9% in 2019 and 3.2% in 2020 driven by construction activity spurred by investments and manufacturing sector, the World Bank said, adding that private consumption is projected to rise supported by higher wages, employment, and rising credit to households.
Poverty is expected to continue trending downwards to an estimated 4.5% in 2019 from 4.8% in 2018, following the trend set in 2009, the lender noted.
Public debt increased to 48.4% in 2018 from 47.7% in 2017, and is expected to rise further to 53.4% in 2019 and 54.4% in 2020.
“Strengthening public spending efficiency and broadening the tax base would help stabilize public debt and rebuild fiscal buffers against future shocks,” the World Bank said.
Unemployment fell to a historic low to 20.7% in 2018, compared to 22.7% a year earlier, with most of the new jobs created in manufacturing, wholesale and retail trade, and industries closely related to tourism.
North Macedonia's inflation remained moderate in 2018, at 1.5%, and is expected to accelerate to 1.8% in 2019 and 1.9% in 2020.
According to the World Bank, lower growth prospects in Europe could affect exports and thus growth in North Macedonia. Increasing overall levels of productivity in the economy remains one of the most important challenges for local firms to be able to compete globally and sustain increases in salaries.