Look for:

Our offer for

Research Detail

2020/11/20 / Erste Group Research

Adapting to the 'new normal'

We slightly downgraded our GDP forecasts to -5.5% y/y and 4% y/y in 2020 and 2021 respectively (from -4% and 5%) as we see only limited recovery after the lockdown period and accounting for a second wave of infections domestically as well as in key trading partners.

Worsening epidemiological situation is causing distortions in everyday social and economic activities, as shown in mobility indicators and high frequency data, suggesting downside risks to domestic demand figures offset partly by government aid packages and strong wage growth. Weak outlook for the global automotive industry could hurt the countries manufacturing sector, given its interlock with German automotive manufacturing chains.

Inflation was slightly higher than anticipated through mid-year, mostly due to a spike in food prices, and given the electricity price hike at the end of July, we revised our forecasts. We have raised our average CPI forecast for this year and the next to 1.2% y/y and 1.4% y/y thus still reflecting a stable outlook overall.

Monetary policy remained relaxed since the start of the crisis. The CB has lowered the rate on its CB bills twice this year by a total of 50bp decreasing it to 1.5%. Additional liquidity was provided alongside the regulatory flexibility aimed to reduce the financial burden for the economy and enhance credit support to most hit sectors.

9M20 budget gap stands at 5.4% of GDP, owing to 8.9% y/y decline in revenues and 11% y/y higher expenditures. We expect that the FY20 deficit will reach MKD55bn (8.3% of GDP) which will lift public debt to just over 60% of GDP. Next year’s gross refinancing needs are high at 11.5% of GDP and the government will likely rely heavy on IFI credit lines.
Social Democratic Union (SDSM) came out on top of parliamentary elections, barely edging out the biggest opposition party VMRO-DPMNE. Once again, the largest Albanian minority party DUI played the role of kingmakers, deciding to move ahead with the Social democrats. Rather swift government formation after elections should enable stronger focus on tackling the economical and health crisis at hand, with EU accession talks slowed by the dispute with Bulgaria.

PDF Download Download PDF (304kB)

General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focus-
Currency in focus-
Sector in focus-


We use cookies and web analysis software to give you the best possible experience on our website. By continuing to browse this website, you consent for these tools to be used. For more details and how to opt out of these, please read our Data protection policy.


Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended). For this reason, the distribution or redistribution of the information, materials and products into United States or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited. The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.