Economical overview
Northern Macedonia is one of Europe's poorest
countries with high unemployment and a large proportion
of the population who are outside the formal economy. A
domestic political crisis caused growth to fall below
zero in 2017, but the curve has subsequently turned
upwards again.
Although progress has been made since independence in
1991, poverty is still widespread (see Social
conditions). Many residents depend on money from
relatives working abroad or on income from the extensive
informal sector, which is estimated to account for
between 20 and 45 percent of GDP. While the official
unemployment rate has steadily declined, it is still
among the highest in Europe at over 20 percent - and for
young people nearly 50 percent.
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Countryaah.com:
Major imports by Macedonia, covering a full list of top products imported by the country and trade value for each product category.
The industry's share of GDP fell sharply in
connection with the disintegration of Yugoslavia. More
recently, it has increased and is approaching a third of
GDP. Agriculture accounts for just over a tenth and the
service sector for the rest.
During Yugoslavia, Macedonia was the poorest of the
six sub-republics and completely dependent on the
support of richer regions. When the subsidy system
collapsed in the disintegration of Yugoslavia in the
early 1990s, the Macedonian economy was hit hard. The
loss of production for the industry was particularly
large, especially for the food, textile and tobacco
industries.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including UEM which represents the country of Macedonia.
The 1991–1995 war, the international sanctions
against ex-Yugoslavia, and the 1994–1995 trade boycott
of Greece due to the name conflict (see Modern History)
further undermined the Macedonian economy. Foreign trade
shrank sharply when traditional trade routes were cut.
After a slight upturn in the late 1990s, the 1998–1999
Kosovo War, with subsequent large refugee flows to
Macedonia, razed the economy. Subsequently, the economic
development of the internal conflict between Macedonians
and Albanians was hampered in 2001, as defense costs
increased, tax revenues decreased and the budget deficit
rose rapidly.
After independence in 1991, the country turned to
international lending institutions for help. The IMF
lent money towards promises of agricultural reform and
privatization in industry as a step towards market
economy. A austerity program to reduce government
spending was launched and measures were put in place
against galloping inflation. A central bank was formed
to control the new currency, the denar. It introduced
VAT in 2000, made cuts to the state administration and
promised the IMF to sell out state-owned large
companies. Together with the World Bank, the EU and
individual member states were also important donors.
The reform program came to an end during the crisis
years, but after 2003 some clearing could be discerned.
In 2008, GDP growth was noted at 5 percent and the
budget deficit had decreased. The denier was now stable
and tied to the euro. Tax collection had improved, which
gave the state increased income. But at the same time,
so far low inflation rose alarmingly fast and the
current account deficit was large (imports were larger
than exports). Despite the relief for companies in the
form of reduced bureaucracy and reduced taxes (a
so-called flat income tax for both businesses and
private individuals of 12 percent was introduced in
2007 and was reduced to 10 percent the following year),
foreign investment and the number of new jobs did not
increase rapidly enough. The reason was, among other
things, problems with widespread corruption and a
defective judicial system. The uncertainty about a
future Macedonian EU membership also affected investors.
Similarly, the infrastructure, such as roads and
electricity supply, and others, had major shortcomings.
After a downturn due to the 2008 international
financial crisis, the economy recovered and growth
accelerated. Among other things, the government allowed
a number of so-called economic free zones to be erected,
with special relief for the companies. It invested
heavily in attracting more foreign direct investment,
which was partially successful, and also made large
state investments in a number of agricultural and
construction projects, including Skopje in 2014. This
helped to reduce the high unemployment rate somewhat.
But the good results were partially eaten up by the
euro crisis in 2012, although Northern Macedonia was one
of the countries that performed best. However, the large
government investments have largely been made with
borrowed money. A large part of the large foreign
investment promised by the government (especially in
connection with elections) has been absent, as have the
job opportunities that would follow. Turkey is the
country that has invested most in Northern Macedonia,
followed by Germany, the United States, the United
Kingdom and Italy.
A few years after the euro crisis, the political
contradictions within the country (see Modern history)
grew, resulting in repercussions, not least when foreign
investors pulled their ears. This led to negative growth
in 2017, but after the new election that year, the
situation has stabilized.
FACTS - FINANCE
External debt
US $ 8,566 million (2017)
Currency
Macedonian denar
Main export goods
catalysts, electronics, vehicle parts, iron and
steel, textile products
Largest trading partner
Germany, Serbia, UK, Greece, Bulgaria
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