Former Yugoslav Republic of Macedonia: country overview

16 August 2012
by Ina Dimireva -- last modified 16 August 2012

The Former Yugoslav Republic of Macedonia became independent in 1991 following the break-up of Yugoslavia. Since December 2005, it has been a candidate country for joining the EU.

Macedonian flag

Member of Schengen area: No

Political system: Republic

Capital city: Skopje

Total area: 25 433 km²

Population: 2.05 million

Currency: denar

Macedonia map

Country overview

The Former Yugoslav Republic of Macedonia became independent in 1991 following the break-up of Yugoslavia. It is a landlocked country in the central Balkans with mountains overlooking a valley and deep basins. Lake Ohrid, which it shares with Albania, is one of the oldest lakes in the world.

Ethnic Macedonians account for two-thirds of the population, but there is also a sizeable ethnic Albanian minority and smaller minorities of Turks and Roma.

The single-chamber parliament or Sobranie has 120 members who are elected for a period of four years. The president, who has limited powers, is elected by popular vote for a five-year term.

The country possesses mineral resources including iron-ore, copper, lead and zinc. Textiles represent the most significant sector for trade, accounting for more than half of total exports. Other important exports include iron, steel, wine and vegetables.

Economy overview

Macedonia is vulnerable to economic developments in Europe - due to strong banking and trade ties - and dependent on regional integration and progress toward EU membership for continued economic growth. 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 the Socialist Federal Republic 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. Since then, 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 29.1%, but may be overstated based on the existence of an extensive gray market, estimated to be between 20% and 45% 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 availability, and a large trade deficit. However, as a result of conservative fiscal policies and a sound financial system, in 2010 the country credit rating improved slightly to BB+ and was kept at that level in 2011. Macroeconomic stability has been maintained by a prudent monetary policy, which keeps the domestic currency pegged against the euro. As a result, GDP growth was modest, but positive, in 2010 and 2011, and inflation was under control.

Source: Europa, CIA - The World Factbook