Skopje, 3 February 2024 (MIA) - The National Bank Council adopted Friday the report for the final quarter of 2023, noting it has not changed the setup of the monetary policy considering the economic developments. The current interest rate, changes in the mandatory reserves and undertaken macro-prudent measures ensure a slowdown of inflation and maintenance of the exchange rate stability. Considering the monetary policy of a stable Denar-Euro exchange rate, the monetary policy setup corresponds to that of the European Central Bank.

The National Bank says the latest indicators coming from the domestic economy point to a macroeconomic picture that mainly corresponds to the October assessments. Real GDP in Q3 sees an annual growth of 1.2 percent, which goes in line with the October projection cycle (1.1 percent).

Available high-frequency data on the economic activity, reads the report, shows early signs of annual growth acceleration in the final quarter of the year, which is currently in compliance with the October assessments for moderate GDP growth of 1.9 percent in 2023, followed by a rise to three percent in 2024 and four percent in 2025-2026. Rising geopolitical tensions due to the war in Ukraine and the conflict in Gaza and their possible spillover are the key risks that could disrupt energy markets and global trade flows.

The annual inflation rate slowed down to 3.4 percent in Q4.

In the whole of 2023, the average inflation rate stands at 9.4 percent and is in line with the bank's projection (9.5 percent). According to the October projections, average inflation is expected to drop to 3.5-4 percent and stabilize at about 2 percent in the medium term. Existing inflationary risks are mainly related to the prices of primary products at global markets, due to the geopolitical tensions and climate change, as well as changes of regulated prices and demand, says the report.

According to the National Bank, the economy's external position is favorable and ensures growth of the foreign currency reserves. Data on reserves in Q4 are better than the October projections and their growth is higher than expected in 2023, thus remaining in the safe zone.

The report adds that circumstances around the monetary policy are still uncertain, while risks for the global and national economy in the short and medium term are still persisting, and therefore further caution is needed, primarily in the management of macroeconomic policies that affect demand, reads the report.

Photo: National Bank