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Economic Outlook for FYR Macedonia

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The International Monetary Fund (IMF) has released a report analyzing the economic situation, growth prospects, and risks to the outlook for the Former Yugoslav Republic of Macedonia (FYR Macedonia).

Key Points

  • Real GDP growth is projected to moderate in 2017 but pick up in the medium-term.
  • Growth is expected to reach:
    • 1.9% in 2017
    • 3.2% in 2018
    • Accelerate further in the medium term
  • Headline inflation is projected to gradually reach 2% by end-2019.

Risks to the Outlook

The return of political stability has reduced sovereign risk perceptions, but there are still risks on the downside:

  • Return of political instability
  • Global risks from weaker growth in partner countries and global policy uncertainty
  • Banking sector links exposing FYR Macedonia to a possible return of financial volatility in Greece

Policy Recommendations

To mitigate these risks, the IMF recommends that the authorities adopt:

  • Targeted macro-prudential measures to counter financial sector stress.
  • Durable fiscal consolidation within a credible medium-term budget framework.
  • Advance structural reforms to enhance productivity and diversification.

Authorities’ Views

The authorities broadly agreed with staff’s economic outlook and risks, but highlighted upside risks from planned support to the private sector, improved transparency, and reforms in the judiciary.