Today, the National Bank of the Republic of Macedonia Council held its eleventh session, at which the latest Quarterly Report and the Macroeconomic projections for the period until the end of 2016 were discussed
Press release of the NBRM
Today, the National Bank of the Republic of Macedonia Council held its eleventh session, at which the latest Quarterly Report and the Macroeconomic projections for the period until the end of 2016 were discussed.
During the third quarter of 2014, the National Bank of the Republic of Macedonia maintained the policy rate at 3.25%, assessing it as appropriate for the economic and financial conditions in this period as well as for the estimated risks. Inflation declined also in that quarter, which creates expectations that the average annual inflation by the end of the year will be around zero. The lower expected inflation was a result not only of the lower inflation registered so far, but also of the absence of price pressures through the domestic demand, as well as the recent declines in the world prices of oil and food. The gradual opening of the positive output gap, amid strengthening of the domestic economy, is the main reason behind the expectations for moderately higher inflation, which in 2015 would be around 1%, and in 2016 around 2%. Geopolitical and climatic factors are the main risks that could lead to upward deviations from this projection.
The economic growth for 2014 is expected to be 3.7%, same as in the previous projection, due to the unchanged initial conditions and retained assumptions for growth support through foreign and public investments. However, given the slower recovery of foreign demand, the growth is expected to be slightly slower than anticipated, equaling 4.1% in 2015, and 4.5% in 2016. New foreign investments, higher capacity utilization, as well as the fiscal stimulus channeled through investments in infrastructure, will continue to be the main factors for the growth of the domestic economy. The commercial banks are expected to increase moderately the support of the consumer and investment decisions of domestic entities. Credit growth would be 8.7% for the whole 2014, 9% for 2015 and 10% for 2016.
In 2014, the balance of payments current account deficit would be 2.7% of GDP, as opposed to 4% in the previous projection, which is mainly due to the lower import demand and smaller outflows in services. In 2015 and 2016, current account deficit is projected at 3.9% and 4.6% of GDP, respectively. This is expected to be caused by the decline in the secondary income, particularly private transfers, the growth of domestic consumption, but mainly by the import of raw materials and equipment by the new foreign investors. Increased share of imports of raw materials and equipment by the new foreign investors in the structure of the current account deficit indicates absence of major imbalances in the economy.
This assertion is supported also by the level of foreign reserves and expectations thereto. Even without the effect of the government borrowing on the international financial markets, foreign reserves grew moderately, in line with the expectations. Decline is expected in 2015, due to the one-off high repayment of the government external debt, while in 2016 re-accumulation of foreign reserves is expected, even without government external borrowing. This expectation is part of the projections for continued gradual increase in foreign investments, as well as increased financial indebtedness of the private sector as a whole. Generally, foreign reserves adequacy indicators will remain at an adequate level over the entire period covered by the projections.
Recent performances point to an economic image that is similar to that in the previous projection, with estimates for solid economic and credit growth, absence of price pressures and balance of payments position which provides growth and further maintenance of the foreign reserves at an adequate level. The risks around the achievement of this macroeconomic scenario remain to be mainly of an external nature, and are related to the possible changes in the pace of recovery of the global economic growth, particularly that in the European Union, as well as to the movements in the prices of primary products in world markets. The National Bank of the Republic of Macedonia will continue to closely monitor the developments in the period ahead, and if necessary it will make appropriate adjustments to the monetary policy conduct aimed at successful achievement of its goals.
At today's session, the National Bank of the Republic of Macedonia Council adopted the Information on the design of the new banknotes of 200 and 2000 denars and entrusted the relevant departments with all the activities necessary for their printing.
Leitmotif of the obverse of the conceptual, and art and graphic design of the 200 denar banknote is the relief with a presentation of the 41st Psalm of David from the Old Testament, which belongs to the infamous terracotta icons from Vinica, one of the most important early medieval archaeological discoveries on the territory of the Republic of Macedonia. On the same side, in the left center field, there is a presentation of an early medieval bow bronze fibula from the beginning of the VII century, found near Prilep. The reverse of the banknote contains a presentation of an architectural and art element of the frontal facade of the "Colorful (Aladzha) Mosque" in Tetovo, one of the most attractive monuments of architecture and art from the Ottoman period in the Republic of Macedonia, complemented by floral elements taken from the decoration of the marble floor tiles of the famous "Isaac Mosque" in Bitola, built at the beginning of the XVI century.
Leitmotif of the obverse of the conceptual, and art and graphic design of the 2000 denar banknote is the presentation of Macedonian bridal costume from Prilep Field, as an impressive reflection of the richness of the folklore heritage of the Republic of Macedonia. On the same side, in the left center field, there is a presentation of a pendant in the form of a poppy head, which was discovered in Suva Reka, Gevgelia. It is an artifact dated to the VII century BC and belongs to the well-known group of Paionian-Macedonian bronzes. The reverse of the banknote contains a presentation of the decoration of the inside of a gilded vessel, which originates from the XVI century and whose central field shows two affronted peacocks near the "source of life" surrounded by lavish floral decoration.
At today's session, the National Bank of the Republic of Macedonia Council, based on the planned schedule and pace of activities, also adopted the Decision on issuing the collector coin "Pisces" from the "Zodiac signs" series. The coin "Pisces" will be issued in a denomination of 10 denars, in 7000 pieces.