November 22, 2017
..growth has slowed to 2.4 percent in 2016 and contracted by 0.9 percent in 2017H1.
", "publishDate": "2017-11-22", "sections": [ { "heading": "Economic activity and inflation", "content": "- Growth has slowed to 2.4 percent in 2016 and contracted by 0.9 percent in 2017H1.\n- Economic activity has been supported by private consumption and exports.\n- Negative effects from the prolonged political instability have restrained investment and slowed down corporate credit growth.\n- Inflation has gradually picked up, after staying negative during the past few years, driven by rising increasing services prices and, to a smaller extent, food prices.\n- The current account deficit has widened in recent years, albeit a narrowing trade deficit, reflecting higher profit repatriation by foreign firms, weaker remittances and higher foreign currency cash holdings by households." }, { "heading": "Fiscal outlook", "content": "- Overall deficit narrowed to 2.6 percent in 2016, largely due to under-execution of capital investment, spending constraints imposed during the pre‑election period, and accumulation of payment arrears.\n- Under-execution of goods and services and capital spending continued in 2017H1, which is expected to keep overall fiscal deficit around 3 percent of GDP in 2017.\n- Public debt is projected to rise to 47 percent of GDP in 2017.\n- The government is in the process of preparing the draft economic program." }, { "heading": "Financial sector and monetary policy", "content": "- The financial sector is well-capitalized, liquid, and profitable.\n- The authorities adopted Basel III standards on capital adequacy earlier this year.\n- Banking system liquidity is high, in part due to a significant slowdown in credit growth to the non-financial corporate sector and banks’ limited preference for increasing sovereign assets holdings.\n- Monetary conditions are accommodative, with the main policy rate reduced back to 3.25 percent in February 2017." }, { "heading": "Executive Board assessment and policy recommendations", "content": "- Directors noted the negative impact of the prolonged political crisis on economic growth and the limited progress on structural reforms.\n- Directors viewed the formation of the new government as a turning point and an opportunity to rebuild policy space and revive reforms.\n- Fiscal policy\n - Emphasized need for fiscal consolidation given the rapid rise in public debt and high gross financing needs.\n - Welcomed authorities’ intention to reduce the overall deficit gradually to 2 percent of GDP in the medium term, stressing this should rely on durable measures.\n - Recommended strengthening tax administration, and increasing property and energy taxation to boost revenues.\n - Recommended improving spending efficiency through subsidy rationalization and better targeting of social spending, and ensuring pension sustainability.\n - Supported plans to strengthen public finance management and increase fiscal transparency.\n- Monetary and financial stability\n - Agreed that an accommodative monetary policy remains appropriate given the still‑negative output gap, low inflation, and external stability.\n - Emphasized that monetary stance should be appropriately tightened as inflation developments warrant or in case of a loss of market confidence, and urged close monitoring.\n - Commended authorities for restoring stability after financial turbulence and for adopting Basel III capital standards.\n - Stressed continued vigilance given a high degree of financial euroization and moderate deleveraging risks.\n - Recommended complementing monetary policy with macro- and micro-prudential measures to counter financial stability risks.\n- Structural reforms and labor market\n - Urged intensifying the pace of structural reforms to increase employment and boost productivity.\n - Welcomed authorities’ plan to support employment and social inclusion, noting these need careful targeting.\n - Stressed need to keep wage growth in line with productivity to preserve competitiveness and fiscal sustainability.\n - Noted importance of increasing labor force participation, particularly that of women, through tax, social assistance, and family leave policies, as well as active labor market policies.\n - Advised further improvements in governance and public administration, trade-enabling logistics, and skills to boost FDI inflows." }, { "heading": "FYR Macedonia: Selected Economic Indicators (as reported)", "content": "- Year-on-year change, unless otherwise specified\n - Real GDP: -0.5 (2012); 2.9 (2013); 3.6 (2014); 3.8 (2015); 2.4 (2016); 1.9 (2017)\n - Real domestic demand: 3.5 (2012); 1.3 (2013); 4.4 (2014); 3.4 (2015); 1.5 (2016); 1.0 (2017)\n - Consumption: 1.4 (2012); 1.6 (2013); 3.7 (2014); 2.6 (2015)\n - Gross investment: 10.2 (2012); 0.5 (2013); 10.7 (2014); -4.3 (2015); -3.6 (2016)\n - Net exports: -26.3 (2012); 7.0 (2013); -8.0 (2014); -1.0 (2015); 3.9 (2016); 1.8 (2017)\n - CPI inflation (annual average): 3.3 (2012); 2.8 (2013); -0.3 (2014); -0.2 (2015); 1.2 (2016)\n - Unemployment rate (annual average): 31.0 (2012); 29.0 (2013); 28.0 (2014); 26.1 (2015); 23.6 (2016); 23.0 (2017)\n - Private Sector Credit 1/: 5.2 (2012); 6.3 (2013); 9.8 (2014); 9.5 (2015); 5.8 (2016)\n- In percent of GDP\n - Current account balance: -3.2 (2012); -1.6 (2013); -2.0 (2014); -2.7 (2015); -1.9 (2016)\n - Goods and services balance: -22.4 (2012); -18.3 (2013); -17.2 (2014); -16.3 (2015); -14.8 (2016); -14.7 (2017)\n - Exports of goods and services: 44.5 (2012); 43.3 (2013); 47.7 (2014); 48.8 (2015); 49.3 (2016); 51.3 (2017)\n - Imports of goods and services: 66.9 (2012); 61.6 (2013); 64.9 (2014); 65.1 (2015); 64.2 (2016); 66.0 (2017)\n - Private transfers: 20.6 (2012); 18.1 (2013); 17.3 (2014); 16.9 (2015); 15.1 (2016); 15.4 (2017)\n - External debt: 68.2 (2012); 64.0 (2013); 70.0 (2014); 69.4 (2015); 73.5 (2016); 71.8 (2017)\n - Domestic saving: 25.8 (2012); 27.2 (2013); 29.8 (2014); 29.1 (2015); 30.9 (2016); 31.3 (2017)\n - Public (saving): 0.2 (2012); -0.9 (2013); -0.1 (2014); 0.0 (2015)\n - Private (saving): 25.5 (2012); 27.7 (2013); 30.6 (2014); 29.3 (2015); 30.7 (2016)\n - Foreign saving: 3.2 (2012); 2.0 (2013); 2.7 (2014)\n - General government gross debt: 33.7 (2012); 34.0 (2013); 38.0 (2014); 38.2 (2015); 39.0 (2016); 38.8 (2017)\n - Public sector gross debt 1/: 36.2 (2012); 37.9 (2013); 44.1 (2014); 45.7 (2015); 47.1 (2016)\n - Central government balance: -3.8 (2012); -4.2 (2013); -3.5 (2014); -2.6 (2015); -3.0 (2016)\n- Memorandum items:\n - Nominal GDP (billions of denars): 466.7 (2012); 501.9 (2013); 527.6 (2014); 558.2 (2015); 607.5 (2016); 631.6 (2017)\n - Nominal GDP (billions of euros): 7.6 (2012); 8.1 (2013); 8.6 (2014); 9.1 (2015); 9.9 (2016); 10.3 (2017)\n - GDP per capita (euros): 3680 (2012); 3930 (2013); 4126 (2014); 4374 (2015); 4755 (2016); ...\n\nSource: IMF press release, November 22, 2017.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Republic of North Macedonia and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/11/21/pr17454-imf-executive-board-concludes-article-iv-consultation-with-macedonia" } ], "bullets": [ "[Markdown version](/en/news/articles/2017/11/21/pr17454-imf-executive-board-concludes-article-iv-consultation-with-macedonia/index.md)", "[Structured JSON version](/en/news/articles/2017/11/21/pr17454-imf-executive-board-concludes-article-iv-consultation-with-macedonia/index.json)", "[Bundle manifest](/en/news/articles/2017/11/21/pr17454-imf-executive-board-concludes-article-iv-consultation-with-macedonia/bundle-manifest.json)", "Published: November 22, 2017", "Growth has slowed to 2.4 percent in 2016 and contracted by 0.9 percent in 2017H1.", "Economic activity has been supported by private consumption and exports.", "Negative effects from the prolonged political instability have restrained investment and slowed down corporate credit growth.", "Inflation has gradually picked up, after staying negative during the past few years, driven by rising increasing services prices and, to a smaller extent, food prices.", "The current account deficit has widened in recent years, albeit a narrowing trade deficit, reflecting higher profit repatriation by foreign firms, weaker remittances and higher foreign currency cash holdings by households.", "Overall deficit narrowed to 2.6 percent in 2016, largely due to under-execution of capital investment, spending constraints imposed during the pre‑election period, and accumulation of payment arrears.", "Under-execution of goods and services and capital spending continued in 2017H1, which is expected to keep overall fiscal deficit around 3 percent of GDP in 2017.", "Public debt is projected to rise to 47 percent of GDP in 2017.", "The government is in the process of preparing the draft economic program.", "The financial sector is well-capitalized, liquid, and profitable.", "The authorities adopted Basel III standards on capital adequacy earlier this year.", "Banking system liquidity is high, in part due to a significant slowdown in credit growth to the non-financial corporate sector and banks’ limited preference for increasing sovereign assets holdings.", "Monetary conditions are accommodative, with the main policy rate reduced back to 3.25 percent in February 2017.", "Directors noted the negative impact of the prolonged political crisis on economic growth and the limited progress on structural reforms.", "Directors viewed the formation of the new government as a turning point and an opportunity to rebuild policy space and revive reforms.", "Fiscal policy", "Monetary and financial stability", "Structural reforms and labor market", "Year-on-year change, unless otherwise specified", "In percent of GDP", "Memorandum items:", "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)", "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)", "[Republic of North Macedonia and the IMF](http://www.imf.org/external/country/MKD/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2017/11/21/pr17454-imf-executive-board-concludes-article-iv-consultation-with-macedonia/index.md", "json": "/en/news/articles/2017/11/21/pr17454-imf-executive-board-concludes-article-iv-consultation-with-macedonia/index.json", "bundleManifest": "/en/news/articles/2017/11/21/pr17454-imf-executive-board-concludes-article-iv-consultation-with-macedonia/bundle-manifest.json" }, "generatedAtUtc": "2026-09-25T21:23:06.196Z" }