From energy to foreign investment and employment/ Economic reforms supporting growth 2026-2028

2026-01-26 21:58:23, Ekonomi CNA

From energy to foreign investment and employment/ Economic reforms supporting

The government aims for employment and energy to be the two main reforms that will have the greatest impact on Gross Domestic Product in 2026-2028.

At least this is the plan presented by the Economic Reform Program for this period, already published in the QBZ. But what are actually the main reforms of this Program and what will be their contribution?

“The reform package supporting the alternative reform scenario includes significant investments in renewable energy production amounting to approximately 914 million euros, additional investments of 117.8 million euros in energy efficiency, a cumulative improvement in export performance equivalent to 1 percentage point of GDP growth per year over two consecutive years, and a targeted increase in foreign direct investment flows of 5 percent applied to 40 percent of total FDI. In parallel, labor market reforms are assumed to increase total employment by 1.3 percent compared to the baseline, while reforms aimed at improving judicial efficiency at all levels are expected to strengthen the institutional environment and contribute to an additional 0.9 percent increase in total factor productivity, which the model projects at an increase of approximately 0.8 percent of potential GDP,” the document states.

Taken together, the reforms under the Economic Program increase the potential level of GDP by approximately 1.65 percent compared to the baseline level.

So, if calculated for the three years covered by the document, the average increase is around 0.55 percentage points in annual GDP growth.

The government's agenda measures, integrated with the Macro-Fiscal framework, project a GDP growth rate of 3.9 percent per year for 2026-2028 in the baseline scenario.

The document estimates that formalization, reduction of corruption and evasion, and simplification of public procedures will promote the expansion of the tax base by ensuring growth without the need for changes in tax rates.

Likewise, improving investment and productivity as drivers for wage growth are also expected to have positive impacts. /Monitor