On the occasion of the audience granted by Their Excellencies the Captains Regent to the IMF Delegation, the new Head of Mission, Anna Shabunina, took stock of the economic situation in the Republic of San Marino and highlighted the resilience of the economy in a context of global challenges
Main topics discussed
Economic resilience:
- Despite a slowdown in the manufacturing sector in 2023 due to lower external demand, the services sector has performed positively, mainly due to an increase in tourism and domestic demand.
- Forecasts for 2024 show higher growth, with further consolidation in 2025.
Sectoral performance:
- Despite a slowdown in the manufacturing sector in 2023 due to lower external demand, the services sector has performed positively, mainly due to an increase in tourism and domestic demand.
- Forecasts for 2024 show higher growth, with further consolidation in 2025.
Economic risks:
- Key downside risks include the potential weakening of external demand and vulnerabilities in the financial system; however, robust manufacturing and sound private sector management provide opportunities for growth.
Fiscal objectives:
- Shabunina stressed the importance of reducing the debt-to-GDP ratio, hoping to bring it below 60 percent by 2025. This could be achieved through efficient public spending, the introduction of tax reforms (including VAT) and another pension reform.
Labour market and banking sector:
- Greater labour market flexibility was recommended to improve labour reallocation.
- Although progress has been made in addressing the remaining legacy issues in the banking sector, risks remain, such as declining interest margins and high personnel costs.
Impact of the EU Agreement:
- The Agreement could facilitate the introduction of necessary reforms and improve San Marino’s integration into European markets, leading to a potential increase in economic growth.
Conclusions
The audience with the IMF is an important moment to reflect and plan San Marino’s economic future. Guidance from international experts can lead the country toward more sustainable and resilient management, addressing existing vulnerabilities and capitalizing on the strengths of its economic policies.
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