2012-02-02 22:44:58 - Macedonia Business Forecast Report Q1 2012 - a new country guide report on companiesandmarkets.com

The decision of the International Court of Justice (IC J) to condemn Greece for blocking Macedonia´s entry into NATO in 2008 is a symbolic triumph for Skopje, but will have little impact on the name dispute between the two countries. Moreover, we expect the political stalemate between the two countries to continue.

The impact of the regional downturn on Macedonia will be felt most in H112. Indeed, we expect economic activity only to accelerate towards the end of the year. Earlier concerns over inflation will subside as weakening economic activity and lower international commodity prices provide some relief from price pressures.

Major Forecast Changes

We have raised our GDP estimate for 2011 to 3.3%, from a previous 2.9%, due to stronger-than-expected growth (5.2%

 

 

y-o-y) in H111. However, we have lowered our forecast for growth in 2012 to 3.0%, from 3.9% previously, as regional headwinds weigh on exports and confidence.

We expect the budget deficit to widen slightly to 2.9% of GDP in 2012, above the previous 2.5% forecast, as GDP growth and revenues come in below government assumptions.

Key Risks To Outlook

The medium-term stability of the governing coalition – and of the wider Macedonian and Albanian communities – will be put under strain if the country does not make any new progress towards EU accession in the coming years.

Domestic demand could be hit harder than expected by a recession or major credit event in the eurozone.

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