Transcript Recent Macroeconomic Developments

Recent Macroeconomic
Developments
Orhan Niksic
The World Bank
October 6, 2011
Internal and external developments in
2010 shook the economy
• GDP contracted by 1.4 percent
• Public expenditures and fiscal deficit increased
substantially (2pp, 3.5 to 6.5).
• International food and oil prices fueled
inflation.
2011: The economy is rebounding
• GDP growth projected at 7 percent
• Inflation is coming down
• Fiscal deficit large, but smaller than projected
earlier.
• IMF program on track
What is driving growth?
• Gold
• Power generation
• Other industrial sectors (textiles and mineral
processing)
• Transport and communications, trade
• Government sector
sector's share in total value added
30%
contribution to growth in pp
4.5
4.0
25%
3.5
3.0
20%
2.5
2.0
15%
1.5
10%
1.0
0.5
5%
-0.5
0%
-1.0
Is growth sustainable?
• Some sources of growth expected to dry out
next year
• External demand will be weaker & no fiscal
stimulus
• Structure of growth will have to change
Growth prospective
• It will moderate
• Reforms are necessary to stimulate growth:
– Governance
– Macro-fiscal sustainability
– Business environment
– Privatization