The new information leads us to estimate that global growth will fall short of expectations, because of both downward corrections to projected activity in the developed world and a major adjustment in Latin America, which is headed to a contraction in 2016. At the same time, the external financial conditions relevant for Chile are estimated to be tighter, while the terms of trade will be lower (figure 2 and table 1). BIS central bankers’ speeches  1  The downscaling in output projections for 2016 is consistent with the lower base at the end of 2015, and with spot indicators suggesting that consumption and investment have remained weak this year to date. On the consumption side, in the last two years the real wage bill has been outgrowing private consumption, leading us to expect a somewhat stronger recovery of the latter during this year. This has not happened, however, which together with the sharper deterioration of the labor market in recent months, plus consumers’ expectations remaining pessimistic and low levels of imports of consumer goods in the first months of the year, mean that this component of growth has to be revised downward. However, by 2017 some recovery of this variable is expected, thanks to a gradual improvement in its fundamentals, particularly, moderate growth in the wage bill and a slight improvement in consumer expectations. Investment, on the other hand, has seen a significant adjustment in recent years, due primarily to the end of the mining investment cycle (figure 3).
In 1995, the monetary strategy of stable exchange rate of the denar was formalized – a strategy for which then and now there is a broad consensus that it is one of the key pillars of the stability of the Macedonian economy. The benefits of macroeconomic stability have been enjoyed for 24 years. Our economy is small, commercial and financially open and hence, prone to external shocks. Despite the numerous external and internal shocks, the National Bank constantly succeeds to keep inflation at a moderate level, which is similar to the European level. Low inflation is extremely important for the protection of the real purchasing power of citizens, but also for maintaining the competitiveness of our exports without which small economies like ours can not achieve higher and sustainable growth. The maintenance of low and stable inflation, as the main goal of the central bank, is underpinned by the stable exchange rate of the domestic currency against the euro. The prudent monetary policy, as well as the good coordination with other macroeconomic policies, led to an almost continuous growth of the foreign reserves, which today are at the highest historical level and directly strengthen the exchange rate stability. Confirmation of the soundness of the policies implemented by the National Bank is a historic step in providing access to European Central Bank’s foreign exchange liquidity. The key to the successful attainment of the goals of the National Bank so far is its strong institutional capacity which has been built for years.