Skopje, 7 December 2024  

“While we have successfully navigated a major storm, we are now facing a shifting global landscape that demands continued vigilance and adaptability”, said the National Bank Governor Anita Angelovska Bezhoska, in a column in the prestigious Serbian weekly NIN. The Governor reflects on the latest inflation crisis and the central bank response, which ensured stabilization while avoiding recession and preserving financial stability. Angelovska Bezhoska points out that given the significant decrease in inflation, central banks have begun the cycle of easing monetary policy, underscoring the critical need for proactive economic policies that can swiftly and effectively address complex challenges that may again arise in the future.

The governor underlines that despite the calming of inflation, there are still challenges posed by the greater inertia in its core component. As she says, core inflation of 5% on average in the region, although only half of its peak, is still more resilient compared to the headline inflation which is nearly 80% lower. “This persistence is largely underscored by wage growth dynamics, which average 12% nominally and 8% in real terms, thus highlighting the potential role of wage policies in sustaining these price pressures”, says the governor.

Reflecting on other policies, she notes that the fiscal response to the crisis has supported economies and well-being, yet this support has come at a cost, depleting fiscal buffers and elevating deficits and public debt. “Hence, maintaining a commitment to fiscal consolidation will be essential in the coming period, not only to ensure fiscal sustainability but also to provide necessary support for monetary policy.”, says Angelovska Bezhoska. The column also notices that structural factors such as deglobalization, aging populations, and climate change, alongside technological advances like artificial intelligence, will continue to shape the outlook for potential growth. Adapting to these developments will require a proactive approach to structural reforms, enabling economies to respond resiliently to potential supply disruptions and mitigate inflationary pressures over the longer term.