2013-10-18 16:53:20 - New Country Reports market report from Business Monitor International: "Macedonia Business Forecast Report Q4 2013"
Political stability in Macedonia following a two-month parliamentary deadlock could prove short-lived, as the ruling Internal Macedonian Revolutionary Organization - Democratic Party for Macedonian National Unity (VMRO-DPMNE) and the opposition Social Democratic Union of Macedonia continue to disagree on the events that led up to the opposition's boycott of the legislature at the start of the year. A return to positive private consumption growth will see Macedonia's economy continue to expand over the course of 2013 and beyond.
A challenging export outlook and falling current transfers will see the current account deficit grow and remain elevated for the foreseeable future.
Major Forecast Changes
We have raised our 2013 real GDP growth forecast from 1.5% to 2.0%, but lowered our 2014 growth forecast from
2.8% to 1.8%, on account of weak domestic consumption.
Full Report Details at
- www.fastmr.com/prod/694763_macedonia_business_forecast_report_q4 ..
We narrowed our current account deficit forecast for 2013 from 4.3% of GDP to 3.9%, and now see a peak deficit of 4.1% of GDP in 2014, as opposed to our previous projection of 4.8%.
Key Risks To Outlook
The prospect of tighter liquidity conditions across Europe, particularly with developed market interest rates seemingly on the rise, could affect the Macedonian economy's growth potential over the next few years.
Falling imports could be an indication of lower capital goods imports due to lower business confidence, which would lead to less investment into productive capacity than we are currently forecasting under our 5.5% real fixed investment growth forecast.
Partial Table of Contents:
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
BMI Political Risk Ratings
Political Deal Remains Fragile Amid Calls For Early Election
- Political stability in Macedonia following a two-month parliamentary deadlock could prove short-lived, as the ruling Internal Macedonian Revolutionary Organization - Democratic Party for Macedonian National Unity and the opposition Social Democratic Union of Macedonia continue to disagree on the events that led up to the opposition's boycott of the legislature at the start of the year. We believe the opposition's calls for early elections are likely to intensify, and could be compounded by the lack of progress on resolving Macedonia's name dispute with Greece.
TABLE: POLITICAL OVERVIEW
Chapter 2: Economic Outlook
BMI Economic Risk Ratings
Growth Outlook Contingent On Household Recovery
- A return to positive private consumption growth will see Macedonia's economy continue to expand over the course of 2013 and beyond. Previously, robust gross fixed investment growth was insufficient to offset a large negative net export contribution to real GDP growth. In the event that household consumption is weaker than we expect this year, we believe that the negative impact on imports would still generate a positive real GDP growth rate.
TABLE: QUARTERLY GDP BY EXPENDITURE
TABLE: GDP BY EXPENDITURE
Balance Of Payments
Deficit Widening Despite Drop In Imports
- Although a drop in Macedonian imports has seen us adjust our current account deficit forecast for 2013 to 3.9% of GDP from 4.3% previously, we continue to see a widening of the shortfall over the next year. A challenging export outlook and falling current transfers will see the current account deficit grow and remain elevated for the foreseeable future. That said, with the shortfall being almost entirely funded by short-term non-direct investment activity such as taking on loans from abroad, we believe that Macedonia's balance of payments position could become less sustainable should liquidity tighten in the foreseeable future.
TABLE: CURRENT ACCOUNT
Political Will Key To Sustainable Fiscal Trajectory
- Macedonia's fiscal deficit will widen to 4.6% of GDP in 2013 on account of lower-than-expected revenues, with few signs that expenditure growth is being reined in by the government. Although we see the shortfall narrowing beyond this year, we currently do not expect a deficit smaller than 3.8% of GDP over the coming years. Key will be the government's commitment to reining in expenditure in light of a weak economic growth outlook, which will stifle revenue growth for years to come.
TABLE: FISCAL POLICY
Regional Sovereign Risk Ratings
Debt Sell-Off Already Accounted For In Ratings
- Emerging Europe's sovereign risk profile has deteriorated slightly this quarter on the back of investors' reassessment of US Federal Reserve policy trajectory, which prompted a swift outflow of capital from regional debt markets. However, since we have long anticipated the rise of regional sovereign borrowing costs in 2013 and 2014, the overall impact on our ratings has been muted.
TABLE: EUROPE SOVEREIGN RISK RATINGS - EVOLUTION OF ABILITY TO PAY
TABLE: CHANGE IN TOTAL SOVEREIGN RISK SCORE FROM LAST QUARTER
TABLE: CHANGE IN ABILITY TO PAY SCORE FROM LAST QUARTER
TABLE: CHANGE IN WILLINGNESS TO PAY SCORE FROM LAST QUARTER
TABLE: EUROPE SOVEREIGN RISK RATINGS - EVOLUTION OF WILLINGNESS TO PAY
Chapter 3: 10-Year Forecast
The Macedonian Economy To 2022
Reform Agenda Will Support Steady Return To Growth
- Macedonia's reformist trajectory looks set to generate solid GDP growth through to 2022 amid steady convergence to EU political and economic standards. Nevertheless, we caution that political uncertainties could yet pose risks to the longer-term outlook.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 4: Business Environment
BMI Business Environment Risk Ratings
Business Environment Outlook
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
Full Table of Contents is available at:
About Business Monitor International
Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010
About Fast Market Research
Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.
For more information about these or related research reports, please visit our website at www.fastmr.com
or call us at 1.800.844.8156.