Macedonia gets some good news as the crisis in the eurozone deepens.
By Aleksandar Pavlevski for Southeast European Times in Skopje – 21/06/12
Eurozone members and other countries in Europe are feeling the heat of the economic crisis. [Reuters]
Credit ratings -- so crucial to public confidence and access to lenders -- have been taking a beating in several EU countries and in Union hopefuls. So it was significant when the credit rating agency Standard & Poor's, in its latest report, confirmed Macedonia's credit rating for foreign and domestic currency as stable BB/B, noting the favourable fiscal policy and low debt, and prospects for eventual EU membership, as the basis for implementing reforms.
"We're pleased to say that this is another strong signal to foreign investors that Macedonia is a country in which they have confidence," the finance ministry said in a statement.
S&P's affirmation came as the agency is reducing ratings for countries in the region -- Cyprus and Slovenia -- and in Western Europe: France, Italy, Portugal, Austria and Spain.
The reasons include insolvency, increased borrowing by the public and private sectors, falling GDP, lack of investments and reduced purchasing power of citizens in the eurozone.
Few think that Macedonia will be insulated from the crisis in Europe. Domestic bankers predict that the economy will stagnate, and that GDP growth will be much lower than the projected 4.5%, even less than the 2% projected by the National Bank.
"Europe is hit by an economic crisis. That will affect Macedonia. Export demand is shrinking; industrial production is falling. If the situation does not improve, economies will stagnate," Gligor Bisev, general manager of the Economic Bank in Macedonia, told SETimes.
According to Eurostat projections, the Macedonian economy will grow by 1.7%. Croatia, Slovenia, Portugal, Holland, Hungary, Cyprus and Spain will end up in debt and the economy of the whole Union -- consisting of all 27 states -- will stagnate.
Current credit ratings and for foreign long-term bonds, as reported by Standard & Poor’s rating service. [SETimes]
Eurostat figures for the region show that Croatia is already in recession, and that its GDP will decline by 1.2% in 2012. Slovenia's will decline by 1.4%.
Montenegro is forecast to finish the year with a minimal GDP increase of 0.4%; Bulgaria will fare slightly better at 0.5%.
"I think the whole European area already has entered or will soon enter a recession, and because the region is almost entirely associated with Europe, it is inevitable that adverse external influences also affect us," Professor Tome Nenovski, from the Economic Faculty in Skopje, told SETimes.
According to the World Bank, Macedonia, Kosovo, Montenegro, Serbia, Albania and Bosnia and Herzegovina are facing significant slowdowns due to the uncertainty in the eurozone.
Yet regionwide, "No country is roughly in such a bad situation as Greece, so there is no room for comparison," said Nenovski.
Cyprus however, will likely resort to financial assistance from the EU to deal with the consequences of the Greek crisis on its banking system. Three leading banks in Cyprus have lost over 3 billion euros, due to the recent EU decision to write off part of Greece's debt.