Macedonian Central Bank (NBRM) held a meeting of its operative monetary policy committee which concluded that fourth quarter economic growth was stronger than the previous quarter, personal savings levels continued to grow, the foreign currency markets remains favorable and bank liquidity is growing.
“There continue to be signs of stabilization in the two points that were most affected by the political crisis – bank savings and use of foreign currency. Preliminary February data show an increase in bank savings has now extended into a nine months long trend. The foreign currency market remains favorable, with NBRM intervening in the first two months of the year with purchases of foreign currency from the market. These favorable developments come at times when the economic fundamentals continue to be seen as positive”, NBRM said in its press release.
Gross domestic product in the last quarter of 2016 grew by 2,4 percent, compared to 2 percent in the third quarter. Real GDP growth for 2016 is 2,4 percent, close to NBRM expectations of 2,3 percent. Total deposits dropped in February due to withdrawals from the corporate sector, but in personal accounts, deposit levels grew for a ninth month in a row.
“At the meeting, it was concluded that economic fundamentals remain positive. Risks from domestic political developments remain pronounced, as we the risks related to global developments. NBRM will continue to closely monitor developments in the coming period and will condition its monetary policy depending on the further stabilizing of the domestic political environment”, the press release informed.
Bank sector liquidity grew for a fifth month in a row, with regular state transactions and NBRM acting to remove excess foreign currency from the market. Usual seasonal movements in the foreign currency market were evident with higher offer than demand. Banks increased their deposits with NBRM, in conditions of reduced credit demand. NBRM decided to increase its offer of bonds to 30.000 million denars, keeping the interest rate at 3,25 percent.
Inflation grew by 0,2 percent in February, somewhat under expectations. Potential risks for higher inflation are contained in import prices estimates. Forex reserves dropped in the end of 2016, but NBRM considers them within the safe zone.