The National Bank of the Republic of Macedonia Council held its sixth session today the latest Quarterly Report was discussed at.

Skopje, 3 May 2012

Press release of the NBRM

The National Bank of the Republic of Macedonia Council held its sixth session today the latest Quarterly Report was discussed at.

The latest available information indicate retained continuity of the macroeconomic developments, as well as slightly more favorable environment for monetary policy conduct in 2012 and 2013. Observed by indicators, the weaker performances in the forth quarter and the worsened expectations for the economies of the most important trading partners show just slower recovery of the domestic economy than previously expected, as a result of which the economic growth is now being estimated on about 2%, instead of 2.4% as previously projected. Growth intensification to 3.7% for 2013 is expected in line with the global recovery and its positive influence on the export sector and the domestic consumption and investment decisions. The financial support through the banks' credit market is expected to contribute towards larger demand in 2012 and 2013. The latest developments in the credit activity, as well as the entire "moderate" macroeconomic scenario for the following two years show that the movements in the credit activity in the following period will be moderate though (credit growth of over 7% and 8%, for 2012 and 2013, respectively). The estimations about the inflation remained unchanged, with the expectations for the annual inflation rate in 2012 being equal 2%, preserving the level also in 2013, until when no pressures of higher significance by the demand is being expected. However, there are more apparent upward risks related to this projection in comparison with the previous one. They result from the uncertainty about the world prices dynamics and their direct and indirect transmission effects on the domestic prices. The performances and the new estimates indicate favorable position of the balance of payments in comparison with the expectations in January, as a result of the lower current account deficit. The reduced trade balance and realization of the net inflows through current transfers higher than expected, resulted in downward revision of the current account deficit from 4.5% of GDP in the previous projection, to 3.2% of GDP for 2012. In combination with the estimations for favorable capital flows this shows accumulation of higher amount of foreign reserves than previously expected. The current account deficit is expected to preserve the same level in 2013 (3.2% of GDP), as well. Besides the anticipated substantial outflow for servicing the Government debt (payment of Eurobond), however, in 2013, as well, additional increase in the foreign reserves and their maintenance on adequate level is expected. 

To summarize, the macroeconomic image for the following period indicates slow recovery, low and controlled inflation, still slow credit flows and a balance of payments position that generate additional foreign reserves. These estimations create environment for monetary relaxation, as a contribution for higher credit growth and thus, support to the domestic economy. On that basis, the NBRM Governor decided to lower the key interest rate on CB bills from 4% to 3.75%.

Governor's office