North Macedonia Economic Outlook
Annual economic growth slowed in Q4, and available data for Q1 paints a mixed picture. Retail sales growth rebounded in annual terms from Q4’s downturn, as price pressures receded somewhat. Moreover, industrial output flatlined during the quarter, improving from Q4’s contraction. That said, higher interest rates likely weighed on investment. Additionally, external demand seemingly weakened, as signaled by a slowdown in tourist arrivals and merchandise exports growth. Shifting to Q2, April data points to fading momentum: Both industrial output and retail sales swung into contraction. In other news, in early May, Prime Minister Kovachevski met with U.S. Secretary of State Blinken. The latter reaffirmed U.S. support for North Macedonia’s EU accession.
North Macedonia Inflation
Inflation fell for the sixth consecutive month in April, coming in at 13.0% from March’s 14.7%. The slowdown was driven by softer price pressures for food and housing and utilities. That said, the ongoing downtrend in inflation did not stop the Central Bank from once again tightening monetary policy; it hiked to 5.75% from 5.50% on 10 May.