Political uncertainties cut down Macedonian economic growth to 2 pct in 2016: World Bank

Macedonian economic growth in 2016 is expected to fall to 2 percent after registering a 3.7 percent growth last year, the World Bank said in its South East Europe Regular Economic Report released Tuesday.

The main cause for the low economic forecast is current political crisis and uncertainties, according to the World Bank.

Prolonged political uncertainties could further affect investment decisions and slow down economic activities while the political situation remains the primary downside risk in the near term, the report said.

However, the World Bank expects the Macedonian economy to recover in the upcoming years.

Macedonian economic growth rate will gradually increase to 3.3 percent in 2017 and 3.7 percent in 2018, the World Bank said in its report.

Private consumption and rising investment, especially public investment related to the construction of the two new highways during this period, are expected to drive the growth, according to World Bank experts.

A concern raised by the World Bank in its report was the level of public debt. Macedonia is facing growing fiscal risks with a rapidly rising public debt, the report said, while adding that the dynamics could undermine growth prospects in the medium term.

In view of World Bank experts, implementing credible fiscal consolidation, with policies for safeguarding fiscal sustainability and placing public debt firmly on a downward trajectory, would help Macedonia mitigate these risks.

On the other hand, the World Bank expects the economic growth in the Western Balkans to go up, from an expected 2.7 percent in 2016 to 3.2 percent in 2017 and 3.5 percent in 2018. Endit