Download Quarterly revision of the macroeconomic projections Governor

Governor
Dimitar Bogov
August, 2012
Macroeconomic projections for 2012 and 2013
Assumptions from the external environment
Basic macroeconomic scenario for 2012 and 2013
Comparison with the previous projection
Projection risks
Effects on the monetary policy
−
During the last three months, the risks on the financial markets
and the problems with the debt crisis in the Euro area increased
again;
−
The economic prospects for the global economy deteriorated
again, emphasizing the downward risks related to the projections;
−
New deterioration in the forecasts for the economic performances
of the most important trading partners of the Macedonia, in
comparison with the preceding projection;
−
The foreign demand trajectory for Macedonian products remains
the same as in the previous projection – decrease in 2012 and
moderate rise in 2013, but now with severer drop in 2012 and
smaller rise in 2013.
Decomposition of foreign effective demand growth
Foreign effective demand
(weighted contributions to annual foreign effective demand growth rates)
(annual growth rates, %)
2.0
2.5
Croatia
2.0
1.5
0.9
1.0
0.0
0.7
0.5
0.5
-0.5
-1.0
-1.0
-1.5
-1.2
-2.0
2011
April 2012
Serbia
1.0
0.0
2010
Bulgaria
1.5
2012
2013
July 2012
Netherlands
0.5
0.0
Italy
-0.5
Spain
-1.0
Greece
-1.5
Germany
-2.0
2010
2011
2012
2013
Belgium
−
The foreign effective inflation is lower compared to the expectations –
estimates for smaller pressures on the domestic prices through the foreign
inflation in 2012 compared to the preceding projection;
−
Moderate acceleration in 2013, on the backdrop of demand recovery and
possible pressures of the food prices – upward revision of the foreign
effective inflation for 2013 compared to the previous projection.
Decomposition of foreign effective inflation
Foreign effective inflation
(annual rates, %)
6.0
(weighted contributions to annual foreign effective inflation rates)
6.0
Bulgaria
5.0
5.0
Austria
4.0
4.3
U.S.
3.0
4.0
2.3
3.0
1.4
2.0
2.2
1.3
1.0
0.8
0.0
Slovenia
2.0
Serbia
1.0
Italy
0.0
Croatia
-1.0
Greece
-2.0
Germany
France
-3.0
2010
2011
April 2012
2012
2013
July 2012
2010
2011
2012
2013
−
The expectations for worse economic performances create downward
pressures on part of the export and import prices;
−
Downward revision of oil and metal prices relative to the previous
projection;
−
Estimations for decrease in the metal prices in 2012 and their stabilization
in 2013;
−
The oil prices dynamics in 2012 is upwards – the price level is expected to
decrease in 2013;
−
Large upward correction with the food prices, compared to the preceding
projection, because of the negative shock on the supply side.
Exchange
rate
USD/EUR
Crude oil
(increase =
appreciation
of EUR)
(USD per
barrel)
(EUR per
barrel)
(EUR based,
2005=100)
2011
5.0
39.3
32.6
5.5
5.0
17.0
2012
2013
-8.8
-1.9
-4.6
-7.7
4.6
-5.9
-4.5
-0.7
-24.8
-2.8
-10.2
-2.3
2012
2013
-3.7
0.0
7.5
-5.6
11.7
-5.6
-6.6
-1.0
-20.4
-1.6
-5.4
0.2
annual changes, %
Forecast July 2012
Forecast April 2012
Wheat price, in EUR
(annual growth rates, %)
80.0
70.0
July 2012
60.0
April 2012
Export metal
Nickel price Copper price
price index
Crude oil
(USD per
(USD per
metric tonne) metric tonne)
Corn price , in EUR
(annual growth rates, %)
100.0
80.0
50.0
60.0
40.0
40.0
30.0
20.0
20.0
10.0
0.0
0.0
July 2012
-20.0
-10.0
April 2012
Q4
Q3
Q2
Q1 2013
Q4
Q3
Q2
Q1 2012
Q4
Q3
Q2
Q1 2011
Q4
Q3
Q2
Q1 2013
Q4
Q3
Q2
Q1 2012
Q4
Q3
Q2
-40.0
Q1 2011
-20.0
−
Further decrease in the Euribor, in conditions of threats for new recession
in the Euro area;
−
Decrease in the ECB interest rate in July 2012;
−
Downward revision of the foreign interest rate relative to the preceding
projection;
Expectations for slight increase in the following period, caused by the
possible inflationary pressures arising from the monetary loosening
undertaken so far.
−
Euribor - 1 month
(quarterly average, in %)
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
2010
2011
July 2012
2012
2013
April 2012
−
−
−
Downward revision of the foreign demand and poor performances in
the first quarter of the year;
Downward revision of the GDP projection in 2012 from 2% to about
1%;
Gradual recovery in 2013 (increase of 3%, compared to 3.7% in April
projection), underpinned by the improved environment, structural
changes and government investments.
GDP
(annual growth rate, in %)
5.0
4.0
2.8
3.0
3.0
2.0
1.8
1.0
0.0
-1.0
3.3
3.7
2.0
3.0
1.0
-1.0
-0.9
-2.0
-3.0
2009
2010
2011
April 2012
2012
July 2012
2013
−
−
−
Reduced activity of the export sector in 2012 and recovery in 2013, given
anticipated large effect of the new capacities activity on the export potential;
Moderate domestic demand in 2012 and strengthening in 2013, backed by the
announced foreign investments and public investments;
Reduced import pressures in 2012 and their new intensification in 2013, in
line with the intensified domestic demand.
Annual growth rates (in %)
General
Household
government
final
final
consumption consumption
-4.7
0.6
1.4
-2.0
4.1
-2.8
period
2009
2010
2011
GDP
-1.0
2.8
3.3
2012
1.0
1.7
1.0
2013
3.0
1.9
2.5
Gross
capital
formation
0.5
-4.6
19.5
Export
-16.0
23.2
12.0
Import
-14.1
8.9
14.8
Domestic
demand
-2.9
-0.3
6.1
Net Export
-10.7
-14.6
21.4
-1.3
-2.9
-1.9
0.9
0.4
8.0
12.4
9.9
3.3
4.6
Gross
capital
formation
0.1
-1.2
4.5
Export
-6.9
8.4
5.2
Import
9.5
-5.2
-9.1
Domestic
demand
-3.6
-0.4
7.2
Net Export
2.6
3.2
-3.9
Contributions to annual growth (in p.p.)
General
Household
government
final
final
consumption consumption
-3.8
0.1
1.1
-0.4
3.2
-0.5
period
2009
2010
2011
GDP
-1.0
2.8
3.3
2012
1.0
1.3
0.2
-0.4
-1.4
1.3
1.1
-0.1
2013
3.0
1.5
0.4
2.1
5.6
-6.6
4.0
-1.0
−
−
−
−
High increase in the inflows from the currency exchange market in the
first half of 2012 (48% annually) – high confidence in the domestic
currency;
Estimates for gradual private transfers deceleration until the end of
2012 and 2013;
Stable trade deficit in 2012 and moderate narrowing in 2013;
Minor movements of the current account deficit in 2012 and 2013.
% of GDP
2009
2010
2011
2012
2013
-6.8
-2.1
-2.7
-2.9
-3.0
Trade balance
-23.3
-20.8
-22.3
-22.2
-21.5
Current transfers, net
16.9
19.4
19.8
20.0
18.9
Current account balance
of which:
−
−
−
Downward revision of the capital inflows in 2012, given lower
debt-creating inflows and lower foreign investments;
Similar level of capital inflows also in 2013, given net repayments
of government debt and higher foreign direct investments;
Moderate increase in the foreign reserves in 2012 and 2013 and
their maintenance around the adequate level.
% of GDP
Capital flows,
without official reserves
of which:
Direct Investments, net
Net borrowing of General Government
2009
2010
2011
2012
2013
6.2
1.8
6.5
3.4
3.5
2.0
2.7
2.2
0.5
4.0
4.9
2.0
1.0
3.0
-0.4
−
−
−
−
−
−
The average inflation rate in the first half of 2012 is 2.3%;
The average inflation in 2012 and 2013 is expected to gravitate around 2.2%;
Absence of demand pressures – prolonged closure of the negative output gap
to the middle of 2014;
Upward pressures of the oil prices in 2012 and their depletion in 2013;
The world food prices move upwards in 2012 and 2013, because of the supply
shock;
Effect of the increase in the regulated prices on the general price level.
Output gap and Inflation
(in %)
5
4
3
2
1
0
-1
-2
-3
-4
2009
2010
2011
Output gap
2012
Inflation
2013
–
–
–
The credit support in the first half 2012 is larger than expected (7.5%
annually, compared to 6.6%), given relaxed monetary conditions and
relatively stable risk perceptions by the banks;
Moderate upward revision of the credit growth to 8% in 2012 and about
10% in 2013, given further deposit growth and disposable foreign sources of
funding;
The banking system continues registering high capital adequacy ratio
(17.5%), high liquidity and relatively stable share of the nonperforming
placements (9.9%) in the first quarter of 2012.
Total loans
(annual growth rates, in %)
12.0
11.0
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2009
2010
2011
July 2012
2012
April 2012
2013
Smaller GDP growth – revision from 2% to approximately 1% for 2012;
revision from 3.7% to 3% for 2013
- weaker initial conditions and worsened foreign demand projections;
- downward correction of all GDP components;
- structural changes and public investments – factor for relatively fast recovery and
smaller dependence of the short-term growth on the situation in Europe;
- the credit support is larger than expected in conditions of relaxed monetary conditions
and stable risk perceptions.
The inflation projection is without larger changes but with more evident
upward risks
- higher initial conditions and higher food prices;
- lower world oil prices and deeper negative output gap.
The external position is less favorable – smaller capital inflows
- smaller current account deficit because of better private transfers;
- large downward revision to the capital flows, in circumstances of worsened perceptions of
the investors and deteriorated conditions for external financing;
- th
- -Foreign reserves remain around the adequate level.
−The projection assumes short-term effects of the
deteriorated global environment, which would exhaust in
2013, with certain risks:
- The possible persistence or deepening of the Euro
area crisis may reflect on the growth dynamics of
the Macedonian economy, as well as on the capital
flows dynamics;
- More apparent risks of price shocks on the supply
side, with potential transmission effects on the other
prices.
–
–
–
–
–
Moderate economy growth – the economy will be below the potential
in the following two years;
Instable environment and enduring risks, but with positive impulse
from the new private and public investments;
The inflation is within the acceptable limits, but with present upward
risks;
The external position is stable, with positive effects of the new
capacities, feeble domestic demand, solid private transfers and
assessment for sufficient capital inflows;
The foreign reserves are around the adequate level;
–
Current monetary conditions are assessed as adequate, i.e. we are
retaining the same interest rate;
–
The need for further regular monitoring of the economic
developments, as well as timely reaction, if needed, remains.