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IMF Projects GDP Growth of 2.2% in 2016


In a concluding statement following its visit to Macedonia, the mission of the International Monetary Fund projects a GDP growth of 2.2% in 2016 with expectations to increase to 3.2% in 2017 provided that parliamentary elections are held in December and a period of stabilization ensues.

"After strengthening in 2015, real GDP growth is projected to slow down to 2.2 percent in 2016 reflecting stalled investment and moderating credit growth due to political uncertainties. Assuming elections in December followed by stability, growth is projected to increase to 3.2 percent in 2017 with a gradual pick­up in the medium term benefiting from infrastructure investment, continued improvement in labor market and some strengthening of credit growth," reads the concluding statement.

The IMF Mission urges the country to aim its policies at pursuing durable fiscal consolidation, maintaining financial stability and addressing labor market and governance weaknesses.

The Mission puts forward three policy priorities against an unsettled political background and weaker growth: adopting high­quality revenue and expenditure measures to build fiscal policy space and enable public debt to remain below 50 percent of GDP; maintaining monetary and financial sector stability; and improving the economy’s potential through labor market and governance reforms.

The positive outlook, it adds, is highly contingent on the return of political stability and continued recovery in the Euro area.

"The recent agreement among main political parties to hold elections on December 11 is a welcome move but uncertainties remain. Restoring an effective political decision­-making process is a prerequisite for decisively consolidating public finances and making the necessary reforms to raise the economy’s medium­term potential," the statement reads.

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