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For nine months in a row, largely thanks to the European crisis, Macedonian industrial output has been in decline, raising fears that the country could fall into recession.
Macedonia hopes to build its way out of crisis | Photo by: Sinisa Jakov Marusic
Latest data from the State Statistical Office show that industrial output in Macedonia in May plummeted 5.4 per cent compared to the same month last year.
In the first five months of this year, compared to the same period in 2011, the fall is even more pronounced, standing at 7.5 per cent.
The figures show that the country’s flagship metal and construction industries, which represent the backbone of the local economy, have been hard hit.
Prime Minister Nikola Gruevski, speaking last week to CNN, admitted that the situation was a cause for concern, explaining that his country is largely dependent on the crisis-hit European economy.
“Approximately 90 per cent of our exports are linked [directly or indirectly] with the EU and in a way we are very dependent on the economic situation in the EU," he said.
In the hope of offsetting the economic slowdown gripping Europe, parliament last week approved taking a €100 million loan from the European Investment Bank for local companies.
“I am confident that this money will help companies, if they apply with good projects, to get out of the crisis and keep up the number of employees,” Finance Minister Zoran Staverski said on Friday, commenting on the latest figures.
In hope of keeping the construction industry alive amid shrinking demand abroad, this year Macedonia envisages spending some €270 million, 11 per cent of its annual budget, on capital investment.
“We will try to maintain a high level of capital investment so that money... ends up in the hands of Macedonian companies,” Stavreski explained.
Opposition Social Democrats contest the strategy, arguing that many of these projects are unproductive ways of spending money that will not yield economic results.
Instead of spending millions on the government-funded revamp of the capital, the project called Skopje 2014, they urge redirecting more money towards building infrastructure that directly boosts economic activity in the future.
Following the latest statistical data on the economy, some observers say that the country could fall into recession this year.
Economic growth was minus 1.4 per cent in the first quarter of this year and forecasts predict negative growth for the second quarter as well.
The government optimistically predicts 2 per cent growth in 2012, saying that in the current circumstances this would be a good result. But many fear that even 2 per cent growth now looks unlikely.
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