Economic indicators show improvement in industrial growth and trade and a slower rate of decline in construction in the second quarter of 2017, the National Bank of Macedonia (NBRM) informed on Wednesday, after a meeting of its Committee on operative monetary policies. NBRM welcomed the developments, after stagnation in the same indicators in the politically tense first quarter of the year. Never the less, NBRM warns about the downward GDP projections which could bring down the 2017 growth projection of 2,5 percent.
Regarding Macedonia’s forex reserves, NBRM finds them to be within expectations and in line with the overall healthy economic fundamentals. The July drop in forex reserves was related to regularly scheduled payment of state debt.
The NBRM Committee decided to reduce the offer of bonds planned for Wednesday while maintaining the interest rate at 3,25 percent. This, according to NBRM, should allow banks to compensate the changes in their liquid potential and to maintain efficient credit policies. Seasonal factors were seen as affecting bank liquidity, especially higher demand for cash in denars related to the Summer holidays. Banks compensated their need of denars with short term NBRM monetary instruments and on the currency markets. July especially saw high volumes at the inter-bank deposits market and banks compensated part of the needed liquidity on the secondary market.
Currency markets saw an increased offer of foreign currency, which was met by the market under usual seasonal accommodations. The increased offer of foreign currency on the market continued into August, allowing banks to increase their foreign currency deposits and NBRM intervened by purchasing foreign currency.
Deposits grew by 0,8 percent in June, reversing a trend of decline in the previous five months. Almost entirely this growth was due to higher household savings. Total deposits grew by 7,6 percent on an annual basis. Credits grew by 5,8 percent in June, which is above NBRM expectations.
In July, inflation slowed down to 1,2 percent, with the annual increase in prices over the first seven months at 0,9 percent. Risks to the annual projection of 1,3 percent are seen as balanced.
Regarding the balance of payments, NBRM found the data for April and May to indicate improvements in on-going financial transactions compared to April projections. Foreign trade statistics show lower deficit compared to projections.