Economic growth in Macedonia is expected to slow down and reach only 2% in 2016 due to the decline in investments, according to the latest Economic Report of the World Bank for Southeast Europe, which was presented in Skopje today.
“For the first time in six years, investments have had a negative contribution to the economic growth, as opposed to other countries in the region. Consumption has become the main stimulus of growth, supported by employment and higher public salaries and transfers”,said Bojan Shimbov, an economist at the World Bank Office in Macedonia.
This growth was mainly due to construction, which increased by 19.3% annually, and was supported by public investments, which on the other hand, made an impact on the rate of increase of the public debt.
The report found that unemployment continues to decline, but youth unemployment has increased more than 50% despite government programs to promote youth employment.
Shimbov noted that this year the rate of the active working population has declined which means that those who were long-term unemployed had either quit looking for employment or there is a trend of emigration from the country.
89% of newly opened places with fiscal stimulus or support from the government, which in the medium term, puts pressure on the pension fund. In recent years, 45% of the revenue in the Pension Fund comes from the state budget, which means it’s heavily dependent on the state.
This year there has been an absence of fiscal consolidation, which affects the increase in the budget deficit and public debt.
“The fiscal deficit increased from the originally designated 3.2% of gross domestic product (GDP) to 4.1% due to higher spending on salaries, pensions, and social transfers than originally budgeted, as well as the adjustment of spending regarding the management of funds for the floods”, added Shimbov.
The Director of the World Bank Office in Macedonia, Marco Mantovanelli noted that it is important on what the money is being spent on from borrowed funds and he expects a resolution to the crisis, more stability and starting the process of attracting investments.
In terms of the region, Albania has a positive growth outlook of 3.2%, Bosnia and Herzegovina – 2.8%, Kosovo – 3.6%, Montenegro – 3.2% and Serbia – 2.5%.
Next year, the World Bank predicts growth prospects for Macedonia of 3.3%, provided that elections are held and a stable government is formed.