Macedonia’s Economy Sees Growth, But Risks Remain

Skopje, February 2017

The International Monetary Fund (IMF) has released its latest report on the Former Yugoslav Republic of Macedonia’s economy, projecting a moderate growth rate this year and a pickup in medium-term growth.

Economic Outlook

According to the IMF, real GDP growth is expected to reach 1.9% in 2017, driven by:

• Resumption of public investment in infrastructure projects
• Strengthening in exports and private consumption

The growth rate is projected to pick up to 3.2% in 2018 and further accelerate in the medium term.

Risks to Economic Outlook

However, the report also highlights several risks that could impact the country’s economic outlook, including:

• Return of political instability, which could undermine investor confidence and slow down growth
• External downside risks from weaker growth in partner countries and global policy uncertainty, which could reduce exports and foreign direct investment (FDI)

Sovereign Risk Perceptions

The IMF has also identified sovereign risk perceptions as a key area of concern, citing concerns about:

• The country’s ability to manage public finances
• Implementing structural reforms

Recommendations

In response to these risks, the authorities have called for a decisive push for structural reforms in labor markets, management of public finances, and judiciary.

The IMF has recommended that the country adopt a medium-term strategy with concrete steps garnering support from domestic stakeholders and international partners, as well as:

• Durable fiscal consolidation within a credible medium-term budget framework

Conclusion

While Macedonia’s economy is expected to see growth this year, the risks remain significant. It will be important for the authorities to implement policies that address these concerns and promote sustainable economic development.