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Macedonia's industrial output has declined for 11 months in a row, data show, raising fears that the country could move into recession.
Photo by: David Wright
Latest data from Macedonia's State Statistical Office, published last week, show that industrial output in July fell by 6.9 per cent compared to the same month last year.
The decline was biggest in the production of electrical equipment - 57 per cent - and in the production of paper - 30 per cent.
The flagship metal industry, which represents the backbone of the economy, has also fallen sharply, by 23 per cent, compared to same period last year.
Amid increasing calls from firms for help, parliament in June approved taking a €100 million loan from the European Investment Bank for local companies.
The government last week said that €30 million of this money will go solely on supporting the metal industry.
Opposition Social Democrats say this is not enough to offset the economic slowdown, urging the government to take additional measures such as suspending taxes on companies for a year or two.
Prime Minister Nikola Gruevski and the Finance Minister Zoran Stavreski have admitted the poor state of the industrial sector, blaming the decline on lower demand for Macedonian exports in EU markets to which Macedonia exports over half of its goods.
“We hope the government's anti-crisis measures will help the industry and prevent massive may-offs of workers,” Stavreski said.
Following the latest statistical data on the economy, some observers say the country could fall into recession this year.
Economic growth was minus 1.4 per cent in the first quarter of this year and several 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.
Half of Macedonian companies have frozen bank accounts because of their severe liquidity problems, latest official data show.
To keep its reform policy credible for investors, the government must find common ground with the IMF and look for a new arrangement, experts say.