17th December 2021, Skopje – “The economic recovery is expected to continue in 2022, driven mainly by strong domestic demand. Forceful policy support has cushioned the economic impact of the pandemic. The 2022 Budget appropriately scales back pandemic-related spending, while continuing to support economic activity. Inflation will start declining in the second half of next year, before stabilizing at around 2% in 2023 and thereafter.” These are the key points in the IMF Staff Concluding Statement of the 2021 Article IV Consultation, following the end of the official mission.
Thereby, as indicated in the Concluding Statement, the Mission recognizes the measures undertaken by the Government to manage the pandemic.
“Forceful policy support has cushioned the economic impact of the pandemic. Fiscal lifelines helped prevent large job losses and protect the most vulnerable, while monetary and financial measures kept credit flowing to the economy.”
The Mission also notes that the 2022 Budget provides for higher health spending, including for vaccines, also providing an envelope to allow a flexible response to pandemic-related spending needs.
A credible medium-term fiscal strategy is key to rebuilding fiscal space, recommending for the efforts for fiscal consolidation to be continued, thus ensuring adequate fiscal space to respond to any future shocks.
The Mission underlines that further improvements in public financial management would support the Government’s plan to scale up investments and, more generally, limit fiscal risks.
They acclaim the progress to date, recommending it is important to continue efforts in ensuring transparency and accountability in the use of public money.
As regards the economic trends next year, employment is likely to recover more gradually, with high wage growth, rising remittances and the release of some pent-up savings boosting the disposable income. The Mission expects for the export growth to be solid, although dampened by supply chain disruptions, notably in the automobile sector, whereas strong domestic demand implies high import growth.
Growth is forecast to pick up from 4% in 2021 to 4.2 percent in 2022, driven mainly by strong domestic demand.
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