FYR of Macedonia: Economy Overview

Having a small, open economy makes the FYR of Macedonia vulnerable to economic developments in Europe and dependent on regional integration and progress toward EU membership for continued economic growth.

Economy Overview

At independence in September 1991, Macedonia was the least developed of the Yugoslav republics, producing a mere 5% of the total federal output of goods and services. The collapse of Yugoslavia ended transfer payments from the central government and eliminated advantages from inclusion in a de facto free trade area. An absence of infrastructure, UN sanctions on the downsized Yugoslavia, and a Greek economic embargo over a dispute about the country's constitutional name and flag hindered economic growth until 1996. GDP subsequently rose each year through 2000. In 2001, during a civil conflict, the economy shrank 4.5% because of decreased trade, intermittent border closures, increased deficit spending on security needs, and investor uncertainty. Growth averaged 4% per year during 2003-06 and more than 5% per year during 2007-08. Macedonia has maintained macroeconomic stability with low inflation, but it has so far lagged the region in attracting foreign investment and creating jobs, despite making extensive fiscal and business sector reforms.  Official unemployment remains high at 32%, but may be overstated based on the existence of an extensive gray market, estimated to be more than 20% of GDP, that is not captured by official statistics. In the wake of the global economic downturn, Macedonia has experienced decreased foreign direct investment, lowered credit, and a large trade deficit, but the financial system remained sound. Macroeconomic stability was maintained by a prudent monetary policy, which kept the domestic currency at the pegged level against the euro, at the expense of raising interest rates. As a result, GDP fell in 2009.

GDP (purchasing power parity):

$18.89 billion (2009 est.)
country comparison to the world: 125
$19.03 billion (2008 est.)
$18.15 billion (2007 est.)
note: data are in 2009 US dollars
Macedonia has a large informal sector.

GDP (official exchange rate):

$9.371 billion (2009 est.)

GDP - real growth rate:

-0.7% (2009 est.)
country comparison to the world: 123
4.8% (2008 est.)
5.9% (2007 est.)

GDP - per capita (PPP):

$9,100 (2009 est.)
country comparison to the world: 115
$9,200 (2008 est.)
$8,800 (2007 est.)
note: data are in 2009 US dollars

GDP - composition by sector:

agriculture: 12.1%
industry: 29.5%
services: 58.4% (2009 est.)

Labor force:

929,000 (2009 est.)
country comparison to the world: 144

Labor force - by occupation:

agriculture: 18.6%
industry: 29.5%
services: 51.9% ( September 2009)

Unemployment rate:

32.2% (2009 est.)
country comparison to the world: 183
33.8% (2008 est.)

Investment (gross fixed):

23.7% of GDP (2009 est.)
country comparison to the world: 55

Budget:

revenues: $2.914 billion
expenditures: $3.161 billion (2009 est.)

Inflation rate (consumer prices):

-0.8% (2009 est.)
country comparison to the world: 10
8.3% (2008 est.)

Commercial bank prime lending rate:

10.07% (31 December 2009 est.)
country comparison to the world: 95
9.68% (31 September 2008 est.)

Stock of domestic credit:

$4.055 billion (31 December 2009 est.)
country comparison to the world: 107
$4.064 billion (31 December 2008 est.)

Agriculture - products:

grapes, wine, tobacco, vegetables, fruits; milk, eggs

Industries:

food processing, beverages, textiles, chemicals, iron, steel, cement, energy, pharmaceuticals

Industrial production growth rate:

-7.7% (2009 est.)
country comparison to the world: 130

Oil - production:

0 bbl/day (2009est.)
country comparison to the world: 168

Natural gas - production:

0 cu m (2009 est.)
country comparison to the world: 161

Current account balance:

$-645.6 million (2009 est.)
country comparison to the world: 121
$-1.22 billion (2008 est.)

Exports:

$2.686 billion (2009 est.)
country comparison to the world: 124
$3.971 billion (2008 est.)

Exports - commodities:

food, beverages, tobacco; textiles, miscellaneous manufactures, iron and steel

Exports - partners:

Germany 20.31%, Greece 13.09%, Italy 11.08%, Bulgaria 10.61%, Croatia 7.74% (2009)

Imports:

$4.842 billion (2009 est.)
country comparison to the world: 111
$6.543 billion (2008 est.)

Imports - commodities:

machinery and equipment, automobiles, chemicals, fuels, food products

Imports - partners:

Germany 15.11%, Greece 14.88%, Bulgaria 9.08%, Italy 7.68%, Turkey 7.59%, Slovenia 6.26%, Hungary 4.31% (2009)

Debt - external:

$5.5 billion (31 December 2009 est.)
country comparison to the world: 99
$4.678 billion (31 December 2008 est.)

Stock of direct foreign investment - at home:

$3.528 (31 October 2009 est.)
country comparison to the world: 84
$3.357 billion (2007 est.)

Stock of direct foreign investment - abroad:

$NA

Exchange rates:

Source: CIA - The World Factbook