The Government has taken COVID-19 measures similar to those of EU member-states, such as loans for businesses, delay of tax payment, subsidies in April and May. This ensures liquidity, keeps jobs and lowers the risk of bankruptcy, said Freek Janmaat, Head of Operations at the EU Delegation in Skopje, on Thursday.
Janmaat presented the European Commission’s economic forecast report for North Macedonia. After economic growth accelerated in 2019, the outlook has deteriorated markedly due to the COVID19 pandemic. External demand is heavily hit by trade disruptions while local containment measures are curbing domestic demand.
“Real growth accelerated to 3.6 percent in 2019, but the upswing ended abruptly in March, when the COVID-19 crisis required a massive lockdown of the economy, and similar measures in the main trading partners led to trade disruptions. All of this has led to projections of a 3.9-percent contraction,” said Janmaat.
The crisis hits the country at a time when fiscal space is restricted and large debt repayments fall due in 2020 and 2021. The expected revenue shortfall in 2020 is projected to drive debt levels higher over the forecast horizon than previously anticipated. Depending on the duration and severity of the lockdown, the debt ratio might stabilize around its 2019 level only well after 2021, assesses the EC.
“A sharp drop in public revenues and fiscal measures to mitigate the crisis impact will lead to a significant increase in public deficit and debt levels in 2020. In a most likely scenario, based on a gradual easing of restrictions and recovery of foreign demand, the economy would start to recover in the second half of the year, and continue to pick up in 2021,” said Janmaat.