Skopje, 13 May 2024 (MIA) — Economic growth will gradually accelerate and price growth will slow down, with an average inflation rate of 3.5 percent and a gradual acceleration of credit activity in the next three-year period, according to the National Bank's projections in its latest quarterly report presented Monday by governor Anita Angelovska-Bezhoska.

According to the projections, the GDP will grow 2.6 percent in 2024 and 3.6 percent in 2025.

For 2026, Angelovska-Bezhoska pointed out, the central bank is expecting moderate acceleration of growth amid conditions of a more favorable external environment and greater stability, consumption and investments.

"The macroeconomic projections for the period 2024 to 2026 point to a largely similar macroeconomic picture as the October projections," the governor said. 

"In terms of economic growth, we expect a gradual acceleration in the next period, if a little slower than in our October projections. These evaluations reflect weaker results in 2023 as well as the assessments of a somewhat less favorable external environment and the delayed impact of domestic factors, such as the slower implementation of construction activities related to new infrastructure projects," she said. 

"GDP growth rates are expected to be 2.6 percent in 2024 and 3.6 percent in 2025, compared to the October expectations of three and four percent in 2024 and 2025," the governor said.

According to her, inflation will maintain a downward trend until the end of the projection period.

"Our projections for 2024 show a slowdown in price growth and an average inflation rate of 3.5 percent, which is at the lower end of the interval expected in October of 3.5−4 percent," the central banker said. 

She said that expectations for the medium term were unchanged, noting that in the period 2025 to 2026, inflation would drop to its historical average of two percent.

According to the National Bank's latest projections, the country's economy's external position was favorable, with better results than expected in 2023 mainly due to a significant drop in imports.

"The gradual normalization of the import of raw materials after the decrease last year in conditions of a stable energy balance," the governor said, "will be the main factor for achieving a moderate current account deficit of 2.4 percent of GDP in 2024." 

"In the coming period, the stronger influence of export demand, in conditions of stabilized energy prices and primary commodities, will contribute to a somewhat reduced deficit in current transactions to the level of 2.1 percent of GDP in 2025–2026," she noted.

The central bank also foresees solid net inflows to its financial account, contributing to further growth of foreign exchange reserves, guaranteeing the stability of the exchange rate, Angelovska-Bezhoska said.

The stable and reliable banking system and lower risks for the economy, she said, would lead to a moderate acceleration of credit growth in 2024 to 6.1 percent.

"With the gradual acceleration of economic growth and the stabilization of expectations," the governor said, "we expect an accelerated activity of the credit market in the coming period, with the growth for the period 2025–2026 reaching 6.8 percent on average." 

"Credit activity will also be supported by the growth of total deposits, which at the end of 2024 would amount to 7.4 percent and would accelerate to 7.6 percent in 2025–2026," she added.

The inside and outside risks to the main macroeconomic scenario are mostly similar to those presented in the October projections, she said, pointing out the need of prudence and monitoring policies that affect the aggregate demand in the domestic economy.

Angelovska-Bezhoska also said that in the first quarter of 2024, the National Bank had maintained monetary policy prudence in line with with the economic conditions.

"The National Bank will continue to carefully monitor macroeconomic data and risks and continue taking all necessary measures, using all available instruments, to maintain the stability of the exchange rate and stabilize inflation in the medium term," the governor said. mr/