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. The economy grew on average 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 of 4.5% in 2020. However, the economy rebounded in 2021, with GDP marking a growth of 4% according to IMF estimates, supported by private consumption and foreign remittances. For 2022 and 2023, growth should stabilize around 4.2% and 3.8%, respectively, though uncertainty remains due to the unstable global conjuncture. With the ongoing restoration of global supply chains and recovery of demand from the German automotive sector, export growth is expected to accelerate sharply.

Public finances were also severely affected by the pandemic, with support measures accounting for about 9% of expected full-year GDP. The overall government deficit was thus estimated at 6.1% in 2021, with an increase of 100% in capital expenditure compared to the 2020 budget). The government plans to reduce the central government fiscal deficit to 3.5% by 2023, although the European Commission forecasts a deficit of 4.9% this year followed by 4.3% in 2023. General government debt – estimated at 53% in 2021 - is projected to rise further at least until 2023, yet to remain below 60% of GDP (at 54.8% as per the IMF latest forecast). Meanwhile, inflation accelerated in 2021 reaching 3.1%, largely due to an increase in energy, food and transportation costs. The IMF expects the rate to follow a downward trend this year (2.2%) and the next (1.5%). 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. In 2021, the EU’s General Affairs Council stated it expects the start of long-awaited EU accession talks with Albania and North Macedonia to happen “as soon as possible”, without the indication of a possible date.

Unemployment – estimated at 15.9% in 2021 by the IMF – is still really high and was exacerbated by the COVID-19 crisis. Thanks to the firming recovery and continued government support to employers, employment growth is expected to pick up over the forecast horizon, with the unemployment rate declining to 15.6% in 2022 and 15.3% 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 income ratio between the richest and poorest 20% of the population is more than eight times, the highest in the EU.

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 12.1413.8914.1015.0216.13
GDP (Constant Prices, Annual % Change) -6.14.02.73.03.9
GDP per Capita (USD) 56677
General Government Gross Debt (in % of GDP) 51.953.253.851.452.1
Inflation Rate (%) 1.23.210.64.52.4
Unemployment Rate (% of the Labour Force) 16.415.715.215.014.8
Current Account (billions USD) -0.42-0.49-0.94-0.69-0.67
Current Account (in % of GDP) -3.4-3.5-6.7-4.6-4.1

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
FYROM Denar () - Average Annual Exchange Rate For 1 GBP 75.2570.3569.5268.6369.40

Source: World Bank, 2015

 

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Latest Update: November 2022

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