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Country Risk Service North Macedonia 2nd Quarter

  • ID: 4771116
  • Country Profile
  • May 2020
  • Region: North Macedonia
  • 26 Pages
  • The Economist Intelligence Unit
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The sovereign risk score has deteriorated by 5 points to 53, triggering a rating downgrade to B. The economic crisis caused by the novel coronavirus pandemic has led to a sharp deterioration in macroeconomic and fiscal indicators. North Macedonia already had limited fiscal space before the crisis, and public debt more than doubled since 2008. A weak institutional environment is a major source of risk.

The currency risk score has worsened by 6 points to 46 but the rating remained unchanged at BB. The economic shock triggered by the pandemic will result in a larger current-account deficit and an increase in external financing needs, prompting the government to request financial assistance from the IMF and the EU. The de facto exchange-rate peg with the euro remains credible nonetheless.

The banking sector risk score has deteriorated by 5 points to 49, triggering a rating downgrade to B. Asset price revaluation risks are very high in the current environment. Non-performing loans declined to 4.8% of total loans in the third quarter of 2019, but we expect them to rise again this year and next. The large share of foreign-currency lending is a source of credit risk.
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Country Risk Service North Macedonia 2nd Quarter

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Sovereign risk
Current assessment
Positive factors
Negative factors
Rating outlook

Currency risk
Current assessment
Positive factors
Negative factors
Rating outlook
Foreign-exchange regime

Banking sector risk
Current assessment
Positive factors
Negative factors
Rating outlook

Generic risks
Political risk assessment
Economic structure risk assessment

Country risk
Overall country risk

Central scenario for 2020-24: Political stability

Central scenario for 2020-24: Election watch

Central scenario for 2020-24: International relations

Central scenario for 2020-24: Policy trends

Central scenario for 2020-24: Fiscal policy

Central scenario for 2020-24: Monetary policy

Central scenario for 2020-24: Economic growth

Central scenario for 2020-24: Inflation

Central scenario for 2020-24: Exchange rates

Central scenario for 2020-24: External sector

Central scenario for 2020-24: External financing requirement

Central scenario for 2020-24: External debt

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

International liquidity

Foreign payment and liquidity indicators

External trade

External financing requirement

External debt stock

External debt service
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