IMF says North Macedonia’s GDP growth in 2021 is 4%, calls for progress in reforms
SKOPJE (North Macedonia), Dec. 17 (SeeNews) – The International Monetary Fund (IMF) on Friday said it had confirmed its forecast for North Macedonia’s economic growth in 2021 to be 4% and advised the government to focus on l ‘Mitigating the economic impact of the pandemic and making progress on long-standing reform priorities.
North Macedonia’s economic growth is expected to accelerate slightly to 4.2% in 2022, driven mainly by strong domestic demand, the global lender said in a statement following consultations under the article. IV.
The economic recovery is underway, but low vaccine coverage and the global resurgence of the pandemic and new viral variants pose risks of slowing growth.
“In addition, political instability could undermine confidence and hamper the implementation of policies. On the positive side, the start of EU membership negotiations could give impetus to reforms and boost growth,” said the IMF, adding that the government should move forward with further reforms such as strengthening public finance management and revenue administration, and the financial safety net.
Average inflation in North Macedonia is expected to reach 3.9% in 2022, as global energy and food prices may continue to rise, the IMF noted.
The country’s budget deficit is expected to fall to 4.3% of GDP in 2022 from 5.9% in 2021.
“IMF staff recommend reducing the budget deficit to almost 1% of GDP over the next five years, which would ensure that the government has sufficient fiscal space to respond to any future shocks,” said the IMF.
The IMF has also advised the government of North Macedonia to allocate additional funds in the budget to mitigate the impact of rising energy prices on low-income households.
North Macedonia’s economic output shrank by around 4.5% year-on-year in real terms in 2020, the country’s statistics office said earlier, citing preliminary data.