This year, which was announced to primarily be the year of economy, unfortunately, will probably be only remembered as the year of racketeering. Even if some average economic results are achieved, they will remain overshadowed by the apparent debacle of the country’s institutions.
After nearly two thirds of this year have passed, economic developments do not give an optimistic outlook. The country will struggle with the usual opportunities to achieve economic growth of up to 3 – 3.5% amid the lack of dispersed growth in living standards and the continuing mass depletion of labor abroad. Now, numerous announcements of the actual danger of recession are added to this, in certain and important economic parts of the world for our country. They are still unclear and only foggy, but they are enough to give us extra care. Some of these signals come from different parts of the world. The most frequently cited are the unreasonable and completely unpredictable trade war between two of the world’s largest economies, the USA and the People’s Republic of China, which account for about 40.4 percent of the world economy. Namely, according to the IMF data for 2018 their economies, according to the volume of GDP are in the amount of 20.4 and 14.0 trillion dollars from the estimated world GDP of about 85.1 trillion dollars. Such a trade war, along with other factors, has slowed the expected growth of the Chinese economy, which is expected to be within the range of “only” in the next two years from 6.0 to 6.2 percent (we say “only” because in the previous 25 years the economy grew at an average rate of about 9 percent a year), and the US economy at about 2.5 percent with the prospect of falling to about 1.6-1.7 percent over the next two years. One of the indicators that the downtrend is possible is the situation with their most significant stock indices that have lost a significant portion of their value in the past 30 days. The Dow-Jones Industrial Average dropped 9.4 percent, the Nasdaq Composite fell 5.0 percent, and the main Chinese stock exchange index SSE (SSE Composite Index) fell 3.4 percent.
Such conditions are slowly spilling over into other important world economies. The EU economies are important to our country. Stock markets are either stagnant or declining, and GDP growth data is a little disturbing. Namely, the EU economy in the past four quarters shows “creeping” activities with quarterly GDP growth of 0.2 percent in the third quarter last year, followed by 0.2, 0.4 and 0.2 percent in the fourth quarter last year respectively, and the first two this year. Annually, it is a growth of unsatisfactory 1.0 – 1.3 percent.
The United Kingdom, the world’s fifth-largest and second-largest European economy, which has been hit by the Brexit process, among other things, has consequences that are already felt. The pound loses its value, GDP declined by 0.2 percent in the second quarter, and the legendary British Steel, once a symbol of British industry and economic-military power, with about 150,000 employees that now are barely working, they are illiquid and even facing complete shutdown, so they are seeking a bailout from a foreign investor to take over. What an irony of fate – the only offer they have received so far was from the Turkish Ataer Holding, a subsidiary of the Turkish Army Pension Fund (Oyak) with which they have already signed a promotion. Global economic movements are completely unpredictable, right? Particular panic in the second quarter of this year was triggered by the fact that the most powerful European and fourth world economies – Germany, showed a decline in activities with a 0.1% GDP fall. It is insignificant, but in the context of overall events it is not to be underestimated either. Recall that Germany is our most important trading partner, absorbing, for instance, about half of our total export of goods. On the occasion of such events, in a recent article, analyst Zoran Jovanovski warned that for the Macedonian economy “there are reasons to expect things to get worse when it comes to exports”. And he is probably right.
Expectations of a new catastrophic “recessionary blow” on the world economy, which many world-renowned scientists and experts have occasionally warned about, will not happen, especially not with major consequences for our economy, but the fact is that there is an external objective warning a wave that threatens the world economy and which of course should keep us awake. In fact, in the latest statistical statement issued by the State Statistical Office on August 15th, regarding the business tendencies in the Macedonian manufacturing industry it is stated that “… the confidence index in the manufacturing industry in July 2019 decreased by 0.1 percentage point compared to June 2019… the situation with the supply of production with orders in July 2019, compared to June 2019, is less favorable, the expectations for the volume of production in the next three months are less favorable than the previous one month, … the assessment of the economic situation of the business entities in July 2019 is less favorable than in the previous month, … the number of employees is expected to decline “and that “the following factors have the greatest impact on limiting the volume of production: lack of skilled labor strength with 26.3 percent, insufficient foreign demand with 17.9 percent, insufficient domestic demand with 13.9 percent and uncertain economic environment with 11.1 percent.”
However routine such assessments are and based on expectations, they are still a relevant indicator that an even more uncertain short-term economic outlook may be ahead. After all, the value of our most important stock exchange index MBI-10, with its stagnation expressed through its cyclical and volatile movements in the last three months, makes it clear that our economy is experiencing something not very positive.
By contrast, the attention of the most important and relevant institutions is now almost completely directed in the opposite direction. They are desperately trying to recover from the shocks caused by the latest phenomena of corruption, crime, organized crime, and even for a country like ours, unexpectedly high and blatant involvement of top political officials in the country. This 2019 was announced as the year of economy, in which the focus of the institutions and the public was to be on economic problems and conditions, right? It seems like there will be nothing, and there is a period in which some of the results will have to be maintained, as they too may be lost.
All of this shows that managing the economy is really an extremely difficult job in which no one ever knows what could happen in the environment, and what could make or break the state of an economy. In such conditions the smaller the economy, the more susceptible to various internal and external shocks.
Views expressed in this article are personal views of the author and do not represent the editorial policy of Nezavisen Vesnik