Continued state investments in agriculture and construction are long-term solutions to the EU economic crisis, which has affected the Macedonian economy.
By Biljana Lajmanovska for Southeast European Times in Skopje -- 24/09/12
Macedonia's economic growth, originally forecast to 4.5 percent, was adjusted to 2.5 percent. [Miki Trajkovski/SETimes]
Macedonia's government announced efforts to stimulate economic growth after it became the last Balkan country to enter a recession, following a 1.4 percent decrease in GDP in the first quarter of this year and 0.9 percent in the second.
Prime Minister Nikola Gruevski said the GDP decrease is due to the negative effects of the European economic crisis on the Macedonian economy.
"Macedonian companies' exports to their traditional partners have decreased because most of the countries are either in recession or facing recession," Gruevski said.
The government started 2012 with an ambitious forecast of 4.5 percent growth but adjusted it to 2.5 percent after rebalancing the budget in June.
"[W]e have to make a new, more realistic assessment and build the parameters of the new economic policy on this assessment," Vancho Uzunov, economics professor at the Faculty of Law in Skopje, told SETimes.
"We should not think of the recession as some kind of monster, but as something that provides us the symptoms of the problems the economy is facing to take measures or 'cures' to overcome the present situation," Tome Nenovski, professor at the Faculty of Economics in Skopje, told SETimes.
Some emphasised the need for the stimulation of domestic producers to complement the governments' foreign investment campaign to address the present situation.
"Government ministers are going on road-shows all over the world to lobby for foreign investment. This is good, but it does not [by itself] solve the problem ... we have to focus on stimulating domestic investors as well," Predrag Trpeski, former deputy minister of finance, told SETimes.
Businesses expect the effects of the foreign investments to materialise in the second half of next year.
"That is the timeframe when we expect production -- increase in work orders for us, greater exports and hiring," Biljana Muratovska, representative of the Makamtrans, an association of freight transporters, told SETimes.
The European markets may be an indicator of how things will likely turn out next, said Branko Azeski, president of the Macedonian Chamber of Commerce.
"If they cannot absorb new orders of Macedonian products by the end of this year, then the negative tendencies will continue," Azeski told SETimes.
Efforts should thus be directed at improving competitiveness and the quality of the Macedonian products, Azeski added.
But some businesses said that more state investment in agriculture and construction, among other sectors that are immune to fluctuations of EU markets and the recession, are long-term solutions.
"Continuing the agricultural subsidies, which now reached 130 million euros, is of crucial importance. Agriculture is the biggest sector in the Macedonian economy which is expected to employ a massive number of new people, and is gaining an increased importance for exports given the global trend of ever lower yields," Ognen Orovcanec, agricultural engineer at Agrounija in Skopje, an enterprise that creates and produces new crop varieties, told SETimes.
"Beginning next year, the world markets will not ask about prices, but whether there is wheat, corn, sunflower, sugar palm, etc, at all," Orovcanec said.
"The planned investment in additional big construction projects -- roads, such as the Smokvica-Demir Kapija section of Corridor 10 which has already begun, then railways and energy-producing structures, will increase the GDP and engage at least 40 other complementary trades," Mile Trajkovski, senior construction engineer based in Skopje, told SETimes.
"Salaries in construction are not high, but the sector provides for economic stability to weather the EU economic crisis," Trajkovski said.