2014-01-03 19:07:08 - Recently published research from Business Monitor International, "Macedonia Business Forecast Report Q1 2014", is now available at Fast Market Research
Stalled progress on Macedonia's EU accession hopes and lingering ethnic tensions remain major challenges to the county's long-term stability. Moreover, we note that a deteriorating demographic picture could pose severe economic challenges and exacerbate ethnic tensions as Macedonian society grows more heterogeneous over the coming decades.
Improving domestic demand conditions will see imports begin to rise, and more emphasis will be placed on private consumption to drive growth.
The recent shift of Macedonian manufactured exports towards Germany has helped to limit the downtrend in goods export growth and has paved the way for improving trade dynamics in the coming years.
Full Report Details at
- www.fastmr.com/prod/759034_macedonia_business_forecast_report_q1 ..
Major Forecast Changes
We have revised up our 2013 real GDP growth forecast from 2.0% to 3.0% and
now see economic growth slowing to 2.0% in 2014, from our previous forecast of 1.8% growth.
We are now forecasting a narrowing of the current account deficit from 3.7% of GDP in 2012 to 3.1% in 2013, having previously projected a 3.9% shortfall. We forecast a 3.0% of GDP current account deficit in 2014, down from our previous forecast for a 4.1% shortfall.
Key Risks To Outlook
We continue to see scope for a moderation in economic growth in H213, which would challenge our assumption that real GDP growth in Macedonia will come in stronger than we had previously assumed. Nevertheless, we note that the more pertinent risk to our outlook is a more abrupt decline in fixed investment growth, which at a time of weak final consumption could lead to a more sudden adjustment in headline growth than the drop from 3.0% to 2.0% that we currently forecast in 2014.
Our expectations for an increase in revenues from MKD140.83bn in 2013 to MKD149.00bn in 2014 could prove too optimistic. In that case, with expenditures set to grow at a similar clip as in 2013 (4.5%), the projected narrowing of Macedonia's fiscal deficit may not occur, instead leading to a wider shortfall than we currently forecast for 2014.
Partial Table of Contents:
Major Forecast changes
Key risks to outlook
chapter 1: political outlook
BMi political risk ratings
Long- term political outlook
unresolved name Dispute and ethnic tensions pose Long- term risks
- Stalled progress on Macedonia's EU accession hopes and lingering ethnic tensions remain major challenges to the county's long-term stability. Moreover, we note that a deteriorating demographic picture could pose severe economic challenges and exacerbate ethnic tensions as Macedonian society grows more heterogeneous over the coming decades. A lot will depend on whether the government will remain committed to economic and political integration with Europe, which has already driven much of the country's reform progress in recent years.
taBle: Political oVerVie W
chapter 2: economic outlook
BMi economic risk ratings
slower Growth in 2014 Despite upward revisions
- The near-term impact of falling fixed investment growth on economic growth in Macedonia will be net positive due to the resulting decline in import growth and a recovering export performance, prompting us to revise up our 2013 real GDP growth forecast from 2.0% to 3.0%. Thereafter, however, we believe that improving domestic demand conditions will see imports begin to rise and more emphasis will be placed on private consumption to drive growth. Accordingly, we forecast a dip in economic growth in 2014 to 2.0% before there is a gradual acceleration in growth to 3.2% by 2017.
taBle: G dP By eXPenditure
Balance of payments
towards More sustainable external Dynamics
- The recent shift of Macedonian manufactured exports towards Germany has helped to limit the downtrend in goods export growth and has paved the way for improving trade dynamics in the coming years. While recent data have encouraged us to revise down our current account deficit projections, we do not see a rapid shrinking of the external shortfall on account of still-weak current transfers into Macedonia.
taBle: Balance of P ayMents
Bulk Of Fiscal Slippage Over: Gradual Deficit Narrowing Ahead
- We see a gradual narrowing of Macedonia's nominal fiscal deficit in the coming years, and believe that the bulk of fiscal slippage in all likelihood occurred earlier in 2013. That said, in the absence of strong economic growth, the government's commitment to restricting expenditure growth will be key in anchoring bond yields near record-low levels. Alternatively, an adverse market reaction to renewed political discord in the legislature during budget negotiations could see borrowing costs increase, resulting in a deepening deficit.
taBle: fiscal P olicy
a challenging investment outlook Despite Favourable credentials
- Ranking 56th out of 172 countries globally in our Business Environment Ratings, Macedonia's investment climate stands out in the Balkan region. However, anaemic economic growth and a stalled EU convergence process prevent foreign investment from rising.
regional sovereign risk ratings
recovery already Factored in
Full Table of Contents is available at:
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