Skopje, 6 March 2022
Our economy, as small and open, is highly dependent on the developments in the European economy. For the time being, no recession in the European Union is expected. The European Central Bank, despite the new situation in Ukraine, expects this year the EU to register growth, although slower than initially expected. However, the risks are present and they depend on the unfolding of the events, the sanctions and the duration of the crisis, says in an interview for MTV, the Governor of the National Bank, Anita Angelovska Bezhoska.
"We are an open economy with very strong connections to the European one. The European economy is our major trading partner, where we export 77% of total exports. The European Central Bank has come up with three preliminary scenarios, depending on the turn of the current events in Ukraine. However, I would emphasize that this situation is really uncertain and it is hard for any central bank to make its forecasts currently, exactly because of the great uncertainty”, Angelovska Bezhoska says.
The Governor says that for the time being, three channels through which the Russian-Ukrainian war could hit the European economy, are indicated.
The first channel is consumption, due to the upward movements of the prices of primary products - energy and food. The higher inflation will mean lower real disposable income of households that would be reflected on the private consumption. However, according to some analysts this effect can be mitigated through the accumulated savings in the pandemic period, Angelovska Bezhoska says.
The second channel through which the Russian-Ukrainian conflict can affect the European economy is through investments. In conditions of high uncertainty, as a rule there is greater restraint of investors. On the other hand, it is considered that this effect could be mitigated by larger investments in the energy sector, due to reduction of the exposure to the Russian economy - investments that would mean increased energy efficiency and investment in renewable energy sources.
The third channel of impact of the current crisis on the European economy is the trade one, Angelovska Bezhoska says. However, the trade connection of the European to the Russian economy has been significantly reduced over the years, especially after the annexation of Crimea in 2014. Currently, the EU export to Russia accounts for only 3%.
Our economy has no direct exposure to the Russian and Ukrainian economy. However, there are risks through our connection to the European economy.