North Macedonia flag North Macedonia: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

North Macedonia is the poorest of the former Yugoslav republics; however, it has made significant progress in expanding its economy over the past decade: GDP grew an average of 5% annually between 2004 and 2008, driven mainly by domestic consumption and exports (notably metals and textile products). The COVID-19-induced crisis, however, prompted a GDP drop, with the economy returning to growth in 2021 (+4% of GDP) and 2022 (+2.7) driven by private consumption and investment. Rising energy prices and a weak performance in Eurozone partner countries are expected to weaken domestic demand and result in a negative contribution from net trade in 2023, with GDP growth forecasted at 3% by the IMF. In 2024, improving external demand and gradual fiscal consolidation should help growth return closer to its pre-crisis level (3.9%), although uncertainty remains high due to geopolitical risks and energy price pressures.

In 2022, strong revenue growth and lower execution of capital spending helped counterbalance the measures taken by the government to mitigate the energy crisis, which amounted to around EUR 750 million (5.7% of GDP), resulting in an overall budget deficit of 5.3% of GDP. Fitch Ratings projects the general government deficit to decline to 4.8% of GDP in 2023, balancing the weaker growth outlook against the phasing out of certain energy support measures and continued under-execution in capital spending. The country’s debt-to-GDP ratio recorded a marginal increase in 2022, reaching 53.8% from 53.2% one year earlier. The IMF forecasts a ratio of 51.4% this year and 52.1% in 2024. Three-quarters of foreign-currency debt is euro-denominated and currency risks are mitigated by the longevity and credibility of the exchange rate peg. Meanwhile, inflation spiked to 10.6% in 2022 fuelled by high energy and food prices. The National Bank increased its policy rate several times throughout the year, which should help reduce the inflation rate, forecasted at 4.5% this year and 2.4% in 2024 by the IMF. While EU accession talks have been blocked by Greece due to a historic dispute over the name of the country, both the EU and Greek authorities praised the decision of the North Macedonian parliament to change it to the Republic of North Macedonia. In March 2020, the General Affairs Council of the EU decided to open accession negotiations with North Macedonia, and in July 2020 the draft negotiating framework was presented to the Member States. Nevertheless, in November the Bulgarian government officially announced that it does not approve the EU negotiation framework for North Macedonia’s accession process and thus practically blocked the country’s membership process over slow progress on the implementation of the 2017 Friendship Treaty between the two countries. This obstacle was overcome after North Macedonia and Bulgaria signed a bilateral protocol in July 2022, but the road ahead is still long as before formal membership talks are launched, North Macedonia must amend its Constitution to include the Bulgarians among the other nation-building countries listed in its preamble.

Unemployment – estimated at 15.2% in 2022 by the IMF – is still really high and was exacerbated by the COVID-19 crisis. Despite the recovery and continued government support to employers, employment growth is expected to pick up only marginally over the forecast horizon, with the unemployment rate declining to 15% in 2023 and 14.8% next year (IMF). However, much of the workforce is employed in the informal economy, thus the exact level of unemployment is hard to assess. According to the latest figures from Eurostat, about a third of North Macedonian citizens live below the poverty line or are at risk of poverty and social exclusion. The country’s GDP per capita (PPP) was estimated at USD 19,783 in 2022 by the IMF; nevertheless, the income ratio between the richest and poorest 20% of the population is more than eight times, the highest in the EU.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 13.5915.8017.4318.4519.54
GDP (Constant Prices, Annual % Change) 2.12.53.23.53.5
GDP per Capita (USD) 6,6007,6728,4638,9579,489
General Government Gross Debt (in % of GDP) 52.151.650.451.150.7
Inflation Rate (%) n/a10.04.32.22.0
Unemployment Rate (% of the Labour Force) 14.414.314.114.013.9
Current Account (billions USD) -0.81-0.52-0.57-0.56-0.56
Current Account (in % of GDP) -6.0-3.3-3.3-3.0-2.9

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
FYROM Denar () - Average Annual Exchange Rate For 1 ZAR 3.794.113.933.813.29

Source: World Bank, 2015

 

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Latest Update: December 2023