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||2020||2021||2022 (E)||2023 (E)||2024 (E)|
|GDP (billions USD)||12.39||13.84||13.67||15.28||16.59|
|GDP (Constant Prices, Annual % Change)||-4.7||3.9||2.2||1.4||3.6|
|GDP per Capita (USD)||5,987||6,687||6,608||7,385||8,021|
|General Government Gross Debt (in % of GDP)||50.8||53.4||51.8||51.9||50.8|
|Inflation Rate (%)||1.2||3.2||14.2||9.2||3.5|
|Unemployment Rate (% of the Labour Force)||16.4||15.7||14.5||14.5||14.5|
|Current Account (billions USD)||-0.36||-0.43||-0.81||-0.70||-0.62|
|Current Account (in % of GDP)||-2.9||-3.1||-6.0||-4.6||-3.7|
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
The Republic of North Macedonia (formerly known as FYROM) has been traditionally based on the agriculture sector, which nowadays represents 7.2% of the GDP and employs 14% of the active population (World Bank, latest data available). According to figures from the UNDP, the North Macedonian agricultural sector is a very profitable business, also due to widespread governmental subsidies (the largest portion of the agriculture budget consists of direct payments for agriculture production and rural development). Arable agricultural land accounts for half of the total territory, of which about two-thirds are categorised as pastures and the rest as arable agricultural land. According to the data of the State Statistical Office, cultivated land in 2021 covered an area of 516,733 hectares. The country mainly produces grapes, tobacco, vegetables and fruits. Sheep and goat breeding is equally important. There are a few deposits of iron, copper and lead in the country. One of the limits of the sector is that parcels are very small and fragmented, with over half of the parcels consisting of two to five hectares, and only 0.14% with 50 hectares or more.
The industrial sector represents 22.4% of the GDP and employs 31% of the active population. It includes chemical products, steel, machinery and textiles. The textile sector constitutes the second main industry of the country after metallurgy (especially the leather industry), with the textile production output being close to an all-time high in the last two decades. The automotive sector enjoys dynamic development and growing importance for the country’s economy. The manufacturing sector alone contributes almost 13% of the GDP (World Bank). According to data from the country’s statistical office, North Macedonia's industrial production edged down 0.3% on the year in 2022.
The tertiary sector represents 56.9% of the GDP and employs 55% of the total workforce. The main income sources come from transport, telecommunications and energy production. The information and communication technology industry is the fastest-growing sector of the Macedonian economy. The banking sector is self-funded and stable, and it is composed of 17 institutions (fifteen banks and two savings houses – European Banking Federation). Trade, transport and tourism were among the sectors most affected by the COVID-19 crisis; however, in 2022 the number of foreign tourists who visited North Macedonia reached 537,436, up by 82.8% year-on-year (mostly from Turkey, Serbia and Greece – data from the national statistical office).
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||13.9||31.1||55.0|
|Value Added (in % of GDP)||7.2||22.4||56.9|
|Value Added (Annual % Change)||-1.2||-2.4||5.2|
Source: World Bank - Latest available data.
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|FYROM Denar () - Average Annual Exchange Rate For 1 MUR||1.57||1.59||1.54||1.55||1.38|
Source: World Bank - Latest available data.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
North Macedonia has an open economy and is highly integrated into international trade, with a total trade-to-GDP ratio of over 148% (World Bank, latest data available). According to data from the State Statistical Office, in 2022 the country mainly exported catalysts with precious metal or precious metal compounds as the active substance, ignition wiring sets and other wiring sets of a kind used in vehicles, and aircraft or ships; while imports were led by petroleum oils and oils obtained from bituminous minerals (other than crude), other metals of the platinum group and alloys thereof, unwrought or in powder form, and electricity and colloidal precious metals.
In 2022, the cuntry’s main export partners were Germany, which accounted for almost half of the total exports alone (45.1%), Bulgaria (5%), Serbia (4.6%), Kosovo (4.6%), and Greece (4%); with the main import origins being Germany (23.4%), the United Kingdom (10.2%), Greece (8.3%), Serbia (5.6%), and China (4.9% - data State Statistical Office). Overall, the EU accounted for 78.3% of total exports and 46.8% of imports. North Macedonia became a member of the WTO (World Trade Organisation) in April 2003. Following a cooperation agreement with the EU, North Macedonia signed a Stabilisation and Association Agreement, which concedes the country duty-free access to European markets. Lastly, in 2006 the country became a member of the Central European Free Trade Agreement (CEFTA), generally considered the antechamber of the EU.
North Macedonia's trade structure has been traditionally in deficit, however, the gap between imports and exports had been gradually decreasing in recent years. In 2021, the country exported goods worth USD 8.1 billion – a 23.3% increase compared to the previous year – importing USD 11.3 billion (+30% y-o-y). With regard to services, North Macedonia exported USD 2 billion in commercial services, importing USD 1.4 billion (data by WTO). The World Bank estimated the country’s 2021 overall trade deficit at 16% of GDP (from 12.7% one year earlier). According to preliminary data from the State Statistical Office, the total value of exported goods from the Republic of North Macedonia in the period January-December 2022 amounted to USD 8.7 billion, a 6.6% increase compared to the same period one year earlier; whereas the value of imported goods stood at USD 12.7 billion, 12% more year-on-year.
|Foreign Trade Indicators||2017||2018||2019||2020||2021|
|Imports of Goods (million USD)||7,723||9,050||9,471||8,710||11,386|
|Exports of Goods (million USD)||5,668||6,911||7,189||6,635||8,186|
|Imports of Services (million USD)||1,183||1,397||1,418||1,118||1,460|
|Exports of Services (million USD)||1,628||1,854||1,821||1,643||2,058|
|Imports of Goods and Services (Annual % Change)||5.2||10.7||10.1||-10.9||13.9|
|Exports of Goods and Services (Annual % Change)||8.3||12.8||8.9||-10.9||12.3|
|Imports of Goods and Services (in % of GDP)||69.0||72.8||76.2||70.5||82.3|
|Exports of Goods and Services (in % of GDP)||55.1||60.4||62.4||57.8||66.2|
|Trade Balance (million USD)||-2,014||-2,055||-2,182||-2,060||-2,792|
|Trade Balance (Including Service) (million USD)||-1,588||-1,612||-1,805||-1,583||-2,197|
|Foreign Trade (in % of GDP)||124.1||133.2||138.6||128.2||148.5|
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
(% of Exports)
|See More Countries||33.4%|
(% of Imports)
|See More Countries||49.5%|
Source: Comtrade, Latest Available Data
|8.7 bn USD of products exported in 2022|
|Reaction initiators, reaction accelerators and...Reaction initiators, reaction accelerators and catalytic preparations, n.e.s. (excl. rubber accelerators)||30.1%|
|Insulated "incl. enamelled or anodised" wire,...Insulated "incl. enamelled or anodised" wire, cable "incl. coaxial cable" and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors||7.2%|
|Seats, whether or not convertible into beds, and...Seats, whether or not convertible into beds, and parts thereof, n.e.s. (excl. medical, surgical, dental or veterinary of heading 9402)||3.0%|
|Parts and accessories for tractors, motor vehicles...Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s.||2.9%|
|Flat-rolled products of iron or non-alloy steel,...Flat-rolled products of iron or non-alloy steel, of a width >= 600 mm, hot-rolled, not clad, plated or coated||2.7%|
|See More Products||54.0%|
|12.8 bn USD of products imported in 2022|
|Platinum, incl. palladium, rhodium, iridium,...Platinum, incl. palladium, rhodium, iridium, osmium and ruthenium, unwrought or in semi-manufactured forms, or in powder form||11.2%|
|Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals||8.9%|
|Electrical energyElectrical energy||4.9%|
|Colloidal precious metals; inorganic or organic...Colloidal precious metals; inorganic or organic compounds of precious metals, whether or not chemically defined; amalgams of precious metals||4.0%|
|Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons||3.1%|
|See More Products||67.8%|
Source: Comtrade, Latest Available Data
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|1.3 bn USD of services exported in 2020|
|Air transportAir transport||1.83%|
|Miscellaneous business,...Miscellaneous business, professional, and technical services||23.48%|
|Legal, accounting, management...Legal, accounting, management consulting, and public relations||9.62%|
|Business and management...Business and management consulting and public relations services||6.74%|
|Legal servicesLegal services||2.32%|
|Accounting, auditing,...Accounting, auditing, bookkeeping, and tax consulting services||0.57%|
|Advertising, market research,...Advertising, market research, and public opinion polling||4.15%|
|Research and developmentResearch and development||0.54%|
|Information servicesInformation services||0.93%|
|Personal travelPersonal travel||18.83%|
|Education-related expenditureEducation-related expenditure||0.56%|
|Health-related expenditureHealth-related expenditure||0.45%|
|Construction in the compiling...Construction in the compiling economy||2.70%|
|Construction abroadConstruction abroad||0.55%|
|Other personal, cultural, and...Other personal, cultural, and recreational services||1.14%|
|Audiovisual and related servicesAudiovisual and related services||0.58%|
|Telecommunications servicesTelecommunications services||1.39%|
|Postal and courier servicesPostal and courier services||0.29%|
|1.1 bn USD of services imported in 2020|
|Sea transportSea transport||3.51%|
|Air transportAir transport||2.02%|
|Miscellaneous business,...Miscellaneous business, professional, and technical services||22.08%|
|Legal, accounting, management...Legal, accounting, management consulting, and public relations||10.43%|
|Business and management...Business and management consulting and public relations services||7.11%|
|Legal servicesLegal services||2.97%|
|Accounting, auditing,...Accounting, auditing, bookkeeping, and tax consulting services||0.35%|
|Advertising, market research,...Advertising, market research, and public opinion polling||3.29%|
|Research and developmentResearch and development||0.29%|
|Personal travelPersonal travel||11.93%|
|Health-related expenditureHealth-related expenditure||0.72%|
|Education-related expenditureEducation-related expenditure||0.67%|
|Business travelBusiness travel||0.93%|
|Information servicesInformation services||0.28%|
|Construction in the compiling...Construction in the compiling economy||3.70%|
|Telecommunications servicesTelecommunications services||1.73%|
|Postal and courier servicesPostal and courier services||0.25%|
|Audiovisual and related servicesAudiovisual and related services||1.35%|
|Other personal, cultural, and...Other personal, cultural, and recreational services||0.56%|
Source: United Nations Statistics Division, Latest Available Data
The executive power is formed by the President, elected by popular vote for a five-year term renewable once, and the Prime Minister. The leader of the majority party or majority coalition is generally elected Prime Minister by the Assembly and is in charge of forming the government.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
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