Page 49 - Central & Southeast Outlook 2020

Net FDI inflow is seen at 4.1% of GDP in 2020, up from 3.8% of GDP in 2019.
1.6 ​Macro - North Macedonia
North Macedonia’s government is projecting economic growth of 3.8% in 2020 that will be driven by domestic consumption and the recovery of investment.
The growth of domestic consumption is seen at 3.3% in 2020, due to wage hikes, higher employment and increased social protection of vulnerable groups of citizens.
The European Commission expects GDP growth of 3.2% for North Macedonia in 2020, but with a more difficult external environment ahead, net exports are not expected to contribute to the GDP growth over the forecast horizon.
The country’s inflation is projected by the European Commission to increase slightly over the forecast horizon, mainly as domestic demand is firming, backed by higher wages. Inflation is seen at 1.9% in 2020 up from 1.4% predicted in 2019. The government expects inflation rate to stay low at 1.7% in 2020, which means a period of stable prices.
Gross investments are planned to increase by 8% in 2020, boosted by investments in the public sector as well as support for investment activities of local and foreign companies.
1.7 ​Macro - Moldova
Economically, the periods of political turmoil in 2019 were neither prolonged nor intense enough to create instability, although they inevitably caused investor confidence to deteriorate.
After growing by 5.8% y/y in Q2, during the climax of the recent political tensions, Moldova’s GDP increased by 4.3% y/y in Q3. In January-September, the average growth rate was 4.8% y/y.
The central bank’s decision to cut its key rate by 2pp to 5.5% despite inflation heading to 8% at yearend and the government’s generous public spending plans are likely to maintain robust growth rates in the coming quarters although the new executive (which took over in mid-November) drafted the 2020 budget on the safe assumption of 3.8% growth drafted by the previous government.
The major international financial institutions (IFIs) expect the country's
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