macedonia february 2011

Country Report

Macedonia

February 2011

Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom

Economist Intelligence Unit

The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For 60 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide.

The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group.

London Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom Tel: (44.20) 7576 8000 Fax: (44.20) 7576 8500 E-mail: [email protected]

New York Economist Intelligence Unit The Economist Group 750 Third Avenue 5th Floor New York, NY 10017, US Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 E-mail: [email protected]

Hong Kong Economist Intelligence Unit 60/F, Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) 2585 3888 Fax: (852) 2802 7638 E-mail: [email protected]

Geneva Economist Intelligence Unit Boulevard des Tranchées 16 1206 Geneva Switzerland Tel: (41) 22 566 2470 Fax: (41) 22 346 93 47 E-mail: [email protected]

This report can be accessed electronically as soon as it is published by visiting store.eiu.com or by contacting a local sales representative.

The whole report may be viewed in PDF format, or can be navigated section-by-section by using the HTML links. In addition, the full archive of previous reports can be accessed in HTML or PDF format, and our search engine can be used to find content of interest quickly. Our automatic alerting service will send a notification via e-mail when new reports become available.

Copyright © 2011 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, by photocopy, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited.

All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it.

ISSN 1462-6691

Symbols for tables �0 or 0.0� means nil or negligible; �n/a� means not available; �� means not applicable

Printed and distributed by IntypeLibra, Units 3/4, Elm Grove Industrial Estate, Wimbledon, SW19 4HE

Macedonia 1

Country Report February 2011 www.eiu.com © The Economist Intelligence Unit Limited 2011

Macedonia

Executive summary 3 Highlights

Outlook for 2011-12 4 Political outlook 5 Economic policy outlook 6 Economic forecast

Monthly review: February 2011 9 The political scene 10 Economic policy 12 Economic performance

Data and charts 15 Annual data and forecast 16 Quarterly data 17 Monthly data 19 Annual trends charts 20 Monthly trends charts 21 Comparative economic indicators

Country snapshot 22 Basic data 23 Political structure

Editors: Toby Iles (editor); Laza Kekic (consulting editor)

Editorial closing date: January 31st 2011

All queries: Tel: (44.20) 7576 8000 E-mail: [email protected] Next report: To request the latest schedule, e-mail [email protected]

2 Macedonia


© T

he

Eco

no

mis

t In

tell

igen

ce U

nit

Lim

ited

20

11

Mai

n r

ailw

ay

Mai

n r

oad

Inte

rnat

ion

al b

ou

nd

ary

Mai

n a

irp

ort

Cap

ital

Maj

or

tow

n

Oth

er t

ow

n

SK

OP

JES

KO

PJE

SK

OP

JE

Bit

ola

Bit

ola

Bit

ola

Go

stiv

ar

Ku

ma

no

vo

Ve

les

Neg

oti

no

Neg

oti

no

Pri

lep

Pri

lep

Neg

oti

no

Ber

ovo

Kav

adar

ciK

avad

arci

Kav

adar

ci

Str

um

ica

Gev

gel

ija

Gev

gel

ija

Gev

gel

ijaR

ado

vis

Sti

p

Ko

can

iK

oca

ni

Ko

can

i

Vin

ica

Bla

ce

Zeli

no

Zeli

no

Sar

ajS

araj

Zeli

no

Lip

kovo

Lip

kovo

Lip

kovo

Sar

ajTe

tovo

Kri

va P

alan

kaK

riva

Pal

anka

Kri

va P

alan

ka

Del

cevo

Del

cevo

Del

cevo

Pri

lep

Oh

rid

Str

ug

aS

tru

ga

Str

ug

a

Kic

evo

Kic

evo

Kic

evo

Kru

sevo

Deb

arD

ebar

Deb

ar

Res

en

MA

CE

DO

NIA

GR

EE

CE

BU

LG

AR

IA

AL

BA

NIA

SE

RB

IAS

ER

BIA

SE

RB

IA

KO

SO

VO

Vardar R.

VardarR.

0 k

m1

53

04

56

0

0 m

iles

15

30

L. O

hri

d

L. P

resp

a

L. D

ojr

an

. R akserT

Ko

zja

k

Macedonia 3


Executive summary

Highlights

February 2011

• The ruling Internal Macedonian Revolutionary Organisation-Democratic Party of Macedonian National Unity (VMRO-DPMNE) is in a strong position following victories in presidential and local elections in April 2009.

• Relations with Greece are likely to remain strained, although strong international pressure may improve the chances of a settlement of the two countries' dispute over Macedonia's name.

• The prime minister, Nikola Gruevski, will be under pressure to resolve the dispute with Greece, and thus remove the final obstacle blocking the opening of Macedonia's EU membership talks and its accession to NATO.

• The budget deficit will remain large in 2011, but the risk to macroeconomic stability will be limited by the agreement with the IMF regarding access to �480m under the Fund's new precautionary credit line (PCL).

• The Economist Intelligence Unit estimates that growth returned in 2010, at 0.8%, after a contraction in real GDP of 0.9% in 2009. We forecast annual growth of 2.9% on average in 2011-12, as credit and wage growth recovers.

• We expect the current-account deficit to average 5% of GDP in 2011-12, after estimated deficits of 3.7% in 2010 and 7.4% in 2009, as import growth slightly outstrips export growth and workers' remittances remain robust.

• Velija Ramkovski, the controversial owner of A1 TV, one of the most influential broadcasters in Macedonia, was arrested on December 23rd on charges of financial irregularities, including large-scale tax evasion.

• During the first three weeks of January tobacco farmers staged a series of protests, holding demonstrations in front of parliament and blocking roads to demand extra government support.

• Zoran Stavreski, the finance minister, expressed the view that domestic banks will reduce interest rates in 2011. Bankers responded to Mr Stavreski's comments by saying that reductions in interest rates would not be drastic.

• Real GDP grew by 1.3% year on year in the third quarter of 2010, compared with -1.3% and 1.1% in the first and second quarters respectively, boosted by stronger household consumption.

• Higher employment, which increased by 21,664 compared with the second quarter, and a rise in real wages drove household consumption in the third quarter.

• In January-October the current-account deficit was US$109m, significantly smaller than the US$566m deficit recorded in the year-earlier period.

Outlook for 2011-12

Monthly review

4 Macedonia


Outlook for 2011-12 Political outlook

The Internal Macedonian Revolutionary Organisation-Democratic Party of Macedonian National Unity (VMRO-DPMNE) of the prime minister, Nikola Gruevski, is in a strong position following its victories in the presidential and local authority elections held in 2009. With these triumphs, the party built on its success in the parliamentary election of June 2008, when it was returned to power with an increased majority. The incumbent president, Gjorge Ivanov, shares Mr Gruevski's conservative, nationalist outlook. He can therefore be expected to carry on working closely with the prime minister�unlike his predecessor, Branko Crvenkovski, who had frequent disagreements with Mr Gruevski. The VMRO-DPMNE is ruling in coalition with the Democratic Union for Integration (DUI), the largest ethnic Albanian party, and has a mandate to govern until 2012. Support for the main opposition party, the Social Democratic Alliance of Macedonia (SDSM), remains weak, but may strengthen if the government fails to make progress in 2011 with NATO membership and EU integration.

More immediately, the government is coming under pressure concerning what some perceive as diminishing freedom of the media. This follows the arrest last December of Velija Ramkovski, the owner of A1 TV, an influential broadcaster and frequent critic of the government. Mr Ramkovski is charged with tax evasion, and A1 TV's accounts have been frozen. In response, the SDSM has announced that it will boycott parliament, and A1 TV is trying to rally popular support. The government maintains that the arrest is part of a wider operation to deal with tax evasion.

The VMRO-DPMNE will need to maintain the support of the DUI to pass various reforms mandated by the Ohrid peace agreement of 2001, which ended a six-month armed conflict between ethnic Albanian militants and Macedonian security forces. In the past the DUI leader, Ali Ahmeti, used to resort to threats and disruptive tactics, such as boycotting parliament, to press his party's demands, but since 2008 the DUI has displayed greater commitment to the political process. However, the opposition Democratic Party of Albanians (DPA), which was part of the previous administration, has now adopted a less co-operative approach, including a boycott of parliament since August 2009.

Relations between ethnic (Slavic-speaking) Macedonians and ethnic Albanians remain problematic, and there is a risk that the nationalist bent of the VMRO-DPMNE may cause increased polarisation. The upcoming census in April 2011, the first since 2002, presents a potential flashpoint. Some prominent ethnic Albanians have expressed dissatisfaction with the scheduled date of the census; they would rather it were held mid-year. Despite ongoing ethnic tensions and the discovery in May of weapons in the north of the country, a return to inter-ethnic armed conflict remains unlikely.

Political stability

Macedonia 5


The next parliamentary election is due in 2012, although there is a chance of an earlier poll. After being elected in 2006, the VMRO-DPMNE called an early election in 2008 in order to consolidate power further. It could repeat this tactic if it manages to unblock Macedonia's path towards EU and NATO integration. If it is unable to achieve this, pressure from the opposition for an early election will continue. However, the main risk of an early election stems from a possible breakdown in relations between the VMRO-DPMNE and the DUI. This should not be ruled out, given frustration on the part of ethnic Albanians, for whom the name issue is not a concern, with Macedonia's lack of progress towards joining the EU and NATO.

There have been no signs as yet of a significant revival in the fortunes of the SDSM since its former leader, Mr Crvenkovski, returned to the helm after the end of his presidential term in May 2009. The lack of progress prompted Mr Crvenkovski to announce the formation of a 12-party opposition alliance in February 2010. However, this centre-left bloc still needs to do more to present a coherent programme before it can pose a real challenge to the VMRO-DPMNE.

Relations with Greece are likely to remain difficult, despite the change of government in Greece, after the opposition Panhellenic Socialist Movement (Pasok) won the election in October 2009. The two countries are in dispute over Macedonia's constitutional name, with Greece arguing that it implies a territorial claim to its northern province that bears the same name. Macedonia has been seeking legal redress from the International Court of Justice (ICJ) in The Hague for Greece's decision in 2008 to block Macedonia's NATO accession. For the same reason, Greece is obstructing Macedonia's EU integration. In December 2009 Greece blocked a decision by EU foreign ministers on setting a date for opening EU accession talks with Macedonia, which has been a candidate country since 2005. Although the Greek prime minister, George Papandreou, claims that his administration is more prepared for a compromise to settle the dispute than its predecessor, he has also made it clear that Greece will continue to insist on a change to Macedonia's official name.

Relations with Serbia are expected to remain tense, following Macedonia's agreement with Kosovo in October 2009 on demarcating their border and establishing diplomatic relations. These moves provoked an angry reaction from Serbia, which continues to regard Kosovo as part of its territory.

Economic policy outlook

Policymakers will remain committed to Macedonia's informal currency peg and are seeking increased inflows of foreign direct investment (FDI) to develop the country's limited and undiversified export capacity. The government recognises the need for fiscal prudence in the context of the denar's informal peg to the euro, but is also keen to increase capital expenditure on transport and energy infrastructure to boost economic activity and make the business environment more attractive to investors. The government will seek to balance these aims. In June the government adopted expenditure cuts to control the budget deficit in 2010, but it is not targeting a smaller budget deficit in 2011.

Policy trends

Election watch

International relations

6 Macedonia


A three-year stand-by arrangement with the IMF came to an end in 2008. The government does not wish to adopt another stand-by arrangement, but it has agreed on access to �480m (US$600m) under the IMF's new precautionary credit line (PCL). The money could be used, if necessary, to finance the 2011 budget deficit and debt-servicing costs. According to Mr Gruevski Macedonia does not necessarily need the credit line, but he calculates that the possibility to access such money will increase confidence in Macedonia and may lead to lower interest rates in private capital markets, both domestically and internationally.

Following several years in which successive governments pursued prudent fiscal policies, in 2009 the authorities undertook moderate fiscal stimulus measures to limit the economic downturn. In combination with lower tax revenue, this led to an expansion of the budget deficit to an estimated 2.8% of GDP�the largest deficit as a proportion of GDP in seven years. The government's budget for 2010 targeted a deficit of 2.5% of GDP, and the government revised down its expenditure plans for the second half of 2010 in order to meet this target. The outlook for tax revenue should improve in 2011, as the economic recovery gathers momentum. However, the government wants to boost spending on capital investment related to transport and energy and is again targeting a deficit equivalent to 2.5% of GDP. Although 2012 is an election year, the Economist Intelligence Unit forecasts that, with revenue performance improving, the budget will record a smaller deficit, of 2% of GDP.

Monetary policy is subordinated to the informal currency peg to the euro. The National Bank of the Republic of Macedonia (NBRM, the central bank) has lowered the interest rates on its 28-day bills, which were raised sharply in the 15 months to April 2009, both to reduce credit growth and to support the currency. Since December 2009 the rate has been lowered by a total of 500 basis points, to 4%, to encourage economic activity. In the near term it may be cut further if lending does not pick up and inflation remains low, but small increases are likely towards the end of the forecast period, as the economy recovers. Until 2008 capital inflows enabled Macedonia to increase its international reserves and to use part of this to pay some of its external debt obligations ahead of schedule. However, in the early part of the forecast period at least the NBRM will prioritise the use of foreign reserves to make interventions in support of the currency. Foreign-exchange reserves began to bounce back in mid-2009 and remained broadly stable in January-November 2010.

Economic forecast

International assumptions summary (% unless otherwise indicated)

2009 2010 2011 2012

Real GDP growth World -0.8 4.8 4.0 4.1

OECD -3.5 2.9 2.3 2.1

Euro area -4.1 1.7 1.5 1.3

EU27 -4.2 1.9 1.6 1.6

International assumptions

Fiscal policy

Monetary policy

Macedonia 7


International assumptions summary (% unless otherwise indicated)

2009 2010 2011 2012

Exchange rates ¥:US$ 93.7 88.0 82.4 82.4

US$:� 1.393 1.326 1.250 1.200

SDR:US$ 0.646 0.652 0.660 0.670

Financial indicators � 3-month interbank rate 1.23 0.84 1.00 1.50

US$ 3-month commercial paper rate 0.26 0.24 0.31 0.70

Commodity prices Oil (Brent; US$/b) 61.9 79.6 90.0 82.3

Gold (US$/troy oz) 973.0 1,224.7 1,331.3 1,232.5

Food, feedstuffs & beverages (% change in US$ terms) -20.4 11.7 19.3 -8.6

Industrial raw materials (% change in US$ terms) -25.6 43.8 7.2 -2.8

Note. Regional GDP growth rates weighted using purchasing power parity exchange rates.

We estimate that after a contraction of 0.9% in 2009 the economy returned to growth of 0.8% in 2010. However, the rebound is modest, as growth in private consumption is limited by subdued wage expansion and high unemployment. Stronger demand in the economies of the country's main trading partners in the EU and the Balkans (except Greece) benefited Macedonian exports in 2010. However, we forecast that in 2011 real GDP growth in the euro zone will dip to 1.5%, from an estimated 1.7% in 2010. Accordingly, export growth in 2011 is likely to be weaker than in 2010. Despite this, we forecast that real GDP growth will accelerate to 2.4% in 2011 as credit and labour markets strengthen, supporting domestic demand. Credit growth remained weak in 2010, owing to a lack of demand for loans and caution on the part of banks as non-performing loans (NPLs) continue to rise, but credit expansion is gradually beginning to recover. As these trends continue in 2012 we forecast faster growth of 3.4%, in that year, supported also by higher investment. Government consumption is likely to expand moderately in 2011-12, but will not be able to make much of a direct contribution to growth.

Consumer prices declined by an average of 0.8% year on year in 2009, following a sharp drop in global oil prices, food price deflation and a decline in domestic demand. In 2010 consumer prices rose by 1.6% year on year in response to higher international oil, commodity and food prices. Inflation ended 2010 at 3% year on year, and we forecast that in 2011 inflation will average 3.4% as oil prices, along with the prices of some imported foods, remain high. There is a risk of higher inflation if the government needs to raise excise duties more than expected to support the budget in 2011. In 2012 we forecast that inflation will moderate to an average of 3.2%, as cost-push inflation diminishes slightly but domestic demand strengthens.

Despite the grumblings of some exporters, the NBRM appears determined to maintain the current exchange-rate regime�under which the denar is informally pegged to the euro at around Den61:�1�as part of its strategy in 2010-12. The NBRM will, if necessary, intervene in the foreign-currency markets and alter its key repo rate in order to support the exchange rate. We forecast that

Economic growth

Exchange rates

Inflation

8 Macedonia


the euro will weaken against the US dollar to an annual average of US$1.23:�1 in 2011-12, compared with US$1.33:�1 in 2010 and US$1.39:�1 in 2009. The real effective exchange rate of the denar is forecast to depreciate marginally in 2011-12, after depreciating by 3.2% in 2010. We forecast that the current-account deficits in 2011-12 will be smaller than before the crisis. This will help to ward off pressure on the currency regime, provided that the government does not allow the budget deficit to exceed its targets significantly.

The current-account deficit contracted to the equivalent of 7.4% of GDP in 2009, from a record 13.1% of GDP in 2008, following weakening domestic demand and lower international oil prices. Despite a 29% rise in the price of dated Brent Blend crude oil in 2010, we estimate that the current-account deficit contracted to the equivalent of 3.7% of GDP, owing to stronger export growth than import growth and an increase in workers' remittances. We forecast that euro area GDP growth will slacken from an estimated 1.7% in 2010 to an average of 1.4% in 2011-12. As import demand recovers in 2011-12 and export growth weakens, we expect the current-account deficit to widen to an average of 5% of GDP. This is based on the assumption that workers' remittances remain robust and that the oil price averages around US$86/barrel.

Forecast summary (% unless otherwise indicated)

2009 a 2010 b 2011c 2012c

Real GDP growth -0.9 b 0.8 2.4 3.4

Industry (excl. construction) -7.7 -4.0 2.5 4.0

Agriculture 3.5 1.0 2.5 3.5

Consumer price inflation (av) -0.8 1.6 a 3.4 3.2

Consumer price inflation (end-period) -1.6 3.0 a 3.1 3.3

Central bank 28-day bill rate (av) 8.5 5.8 5.3 5.3

General government balance (% of GDP) -2.8 b -2.5 -2.4 -2.0

Exports of goods fob (US$ m) 2,686 3,366 3,814 4,048

Imports of goods fob (US$ m) -4,842 -5,375 -5,880 -6,181

Current-account balance (US$ m) -646 -311 -408 -461

Current-account balance (% of GDP) -7.4 b -3.7 -4.8 -5.3

External debt (year-end; US$ bn) 5.5 b 5.5 5.5 5.6

Exchange rate Den:US$ (av) 44.10 46.37 a 49.12 51.17

Exchange rate Den:� (av) 61.43 61.50 a 61.40 61.40

Exchange rate Den:� (end-period) 61.15 61.50 a 61.40 61.40

a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.

External sector

Macedonia 9


Monthly review: February 2011

The political scene

Velija Ramkovski, the controversial owner of A1 TV, one of the most influential broadcasters in Macedonia and a critic of the government, was arrested on December 23rd 2010 on charges of financial irregularities, including large-scale tax evasion. Several weeks earlier the police had raided his main corporate premises to gather evidence, causing a furore among the opposition, who claimed the government was silencing its critics in the media (January 2011, The political scene). Mr Ramkovski was arrested along with 13 associates, including family members and the director of A1 TV. The police continue to search for several other individuals related to the case. On January 21st a court decision extended the detention of those arrested for another 30 days.

Goran Trajkovski, the director of the Public Revenue Office, announced that so far the investigation had found that Mr Ramkovski's companies had generated approximately �17.5m of unreported income in 2005-10 and failed to pay at least �4m in taxes.

After the arrest of Mr Ramkovski, who had referred to the government as a dictatorship, Branko Crvenkovski, the leader of the main opposition Social Democratic Alliance of Macedonia (SDSM), announced that a lawsuit had been brought against Mr Trajkovski and the interior minister, Gordana Jankulovska, for failing to follow proper procedure. The opposition's main complaint, however, is that this is "selective justice" used against an enemy of the government. A subsequent court decision to freeze A1 TV's accounts added fuel to SDSM's fire, and the party announced that it would boycott parliament. In response the government said that the arrest was part of a wider operation, codenamed Cobweb, to deal with tax evasion.

A1 TV has frequently aired criticism of the government since 2008, when the previously close ties between Mr Ramkovski and the prime minister, Nikola Gruevski, broke down acrimoniously. However, despite the opposition's persistent efforts, including a protest dubbed "March for Democracy" on December 5th, their claim that Mr Ramkovski's arrest amounts to an attack on media freedom has not been championed by European parliamentarians and international officials in the capital, Skopje.

In its latest progress report, published in November 2010, the European Commission expressed concern about press freedom in Macedonia. Diminished press freedom also contributed to a worsening of Macedonia's score in the Economist Intelligence Unit's Democracy Index (January 2011, The political scene). However, the Commission is also keen to see action taken against financial crimes such as tax evasion and money-laundering. Nevertheless, the political dimension of Mr Ramkovski's case does raise questions about the possible motives for his arrest. The EU will hope that Macedonia continues to crack down on tax evasion, but will be increasingly sensitive to questions of political bias.

Media mogul is arrested in tax evasion case

10 Macedonia


During the first three weeks of January tobacco farmers staged a series of protests, holding demonstrations in front of parliament and blocking roads to demand extra government support. The protests died down towards the end of the month, although the farmers failed to extract any new concessions from the government. The threat of renewed demonstrations remains.

Tobacco farming is one of the largest employers in Macedonia, and tobacco farmers are eligible for substantial subsidies from the state�around �22m in 2010. However, this system has broken down because the farmers are unhappy with the price offered by buyers and want the government to guarantee a higher price. In response the government has reaffirmed its support for farmers, but said that it will not guarantee higher purchase prices.

The SDSM was quick to lend its support to the protestors' cause and, given the number of people whose livelihoods are connected to tobacco farming, the party will hope to narrow the large gap in opinion polls between itself and the ruling Internal Macedonian Revolutionary Organisation-Democratic Party for Macedonian National Unity (VMRO-DPMNE). According to a poll conducted in January by the International Republican Institute (IRI), the VMRO-DPMNE was supported by 27% of respondents, down from 32% in the previous month's poll. Support for the SDSM rose by a couple of points to 16%. Individually, Mr Gruevski remains the country's most popular politician with 17%, compared with 9% for Mr Crvenkovski and 8% for Ali Ahmeti, the leader of the co-ruling ethnic Albanian party, the Democratic Union for Integration (DUI).

Economic policy

The finance minister, Zoran Stavreski, stated in January that he expects domestic banks to reduce interest rates in 2011. In support of its forecast for real GDP growth of 3.5% in 2011, the IMF cites the potential for banks in Macedonia to expand lending. There is a strong deposit base, and the loan-to-deposit ratio is currently less than 100%. If the recent trend in interest and deposit rates continues, it is likely that credit growth will gain pace in 2011. However, this may be a gradual process, given caution on the part of banks in the context of the ongoing growth of non-performing loans (NPLs), as well as on the part of consumers and corporates. Bankers responded to Mr Stavreski's comments by saying that reductions in interest rates would not be drastic.

Throughout 2010 growth in deposits from the private sector has been in double digits year on year, buoyed by high interest rates. Loans to the private sector, however, have only expanded weakly. Growth of credit to the private sector decelerated sharply, from 34.6% year on year at end-2008 to 3.3% at end-2009. At end-2010 the rate was 7.1%, slightly down from 8% in October, but month-on-month credit has continued to grow only modestly, by an average of 0.4% in September-December. The National Bank of the Republic of Macedonia (NBRM, the central bank) has loosened monetary policy in 2010 in order to stimulate liquidity and lending. In December 2009 the central bank lowered the interest rates on its 28-day bills by a total of 500 basis points, to 4%. In response, commercial bank interest rates have been edging down, from a weighted

Tobacco farmers demonstrate for extra government support

Finance minister expects significant drop in interest rate

Macedonia 11


average of 10.3% in December 2009 to 9.1% in November 2010. There may be room for commercial bank interest rates to fall further in the coming months, especially as banks have also been cutting deposit rates. The weighted average deposit rate among banks peaked in December 2009, when the NBRM started to ease its policy rate, and subsequently trended down to 6.7% in November.

Lending and deposit interest rates (%; weighted average rates)

Source: National Bank of the Republic of Macedonia.

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0Deposit rateLending rate

NovSepJulMayMarJan10




Macedonia has abolished all remaining custom duties on industrial products imported from EU countries with effect from January 2011. The liberalisation took place as part of its obligations under the Stabilisation and Association Agreement (SAA) between Macedonia and the EU, signed in 2001. The SAA provides for an asymmetrical trade regime in favour of Macedonia for a period of ten years in order to help the Macedonian economy to adapt to stronger competition in the form of EU imports. Therefore the SAA has allowed free access for Macedonian products to EU markets since 2001 and adopted a scheme for the gradual reduction of customs duties on EU products imported into Macedonia until 2011. In January Macedonia also removed customs duties affecting trade with the member states of the European Free Trade Association (EFTA), fulfilling the obligations of the free-trade agreement in force since 2002, which, just as the SAA, allowed for a the gradual reduction of custom duties until 2011.

There has been no further liberalisation of trade in agricultural products between Macedonia and the EU. However, Macedonia has been pursuing liberalisation of trade in agricultural products as part of the Central European Free Trade Agreement (CEFTA). CEFTA comprises Albania, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Montenegro, Moldova and Serbia. Macedonia has agreed further liberalisation of trade in agricultural products with Albania and Moldova. Agriculture is an important sector in Macedonia�gross value added (GVA) from agriculture accounted for 11.2% of total GVA in 2009�and liberalisation within CEFTA could help to boost exports moderately. However, it will also open up the agricultural sector to greater competition from imports.

Further liberalisation of foreign trade takes place

12 Macedonia


Economic performance

Real GDP grew by 1.3% year on year in the third quarter of 2010, compared with a contraction of 1.3% in the first quarter and growth of 1.1% in the second quarter, according to estimates from the State Statistical Office (SSO). The improvement was driven by stronger household consumption, which expanded by 4.1% year on year, and gross capital formation, which was up by 4.8%. Given the end-of-season factors in the third quarter, fragile manufacturing output and a stronger base-year comparison, the improvement may not have been sustained in the fourth quarter.

Gross domestic product by expenditure (% real growth, year on year)

2009 2010 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 QtrHousehold final consumption (incl NPISHsa) -3.3 -2.6 -5.7 -3.9 0.6 3.4 4.1

Government consumption -3.8 -1.2 0.3 -18.1 -0.4 -7.7 -0.4Gross capital formation 32.5 -14.2 -9.5 4.5 -47.3 4.7 4.8

Exports of goods & services -15.9 -7.2 -7.3 -13.0 8.3 15.6 25.2Imports of goods & services -4.2 -11.4 -11.9 -16.0 -14.0 12.2 23.8Gross domestic product -0.8 -1.9 -2.2 1.2 -1.3 1.1 1.3

a Non-profit institutions serving households.

Source: State Statistical Office.

The robust performance of household consumption, which is the largest expenditure component of GDP, is partly explained by the weak base of comparison�in the third quarter of 2009 household consumption declined by 5.7% year on year. However, there were also positive developments in the third quarter. According to the SSO's labour force survey, employment rose by 21,664 compared with the second quarter. In the second quarter the increase in employment was smaller�11,000�and was driven entirely by seasonal factors related to agriculture and tourism. In the third quarter the increase was not entirely seasonal. Agriculture again accounted for a large portion of the increase, but other sectors also made significant contributions, notably retail and wholesale (7,430), and manufacturing (4,182). In the second quarter both these sectors shed workers. In addition, after declining in the first and second quarters of 2010, average monthly real wages rose by 1.1% in the third quarter.

No. of people in employment by sector, 2010 1 Qtr 2 Qtr Change 3 Qtr ChangeAgriculture 109,588 120,966 11,378 128,601 7,635

Mining & quarrying 4,897 6,042 1,145 4,529 -1,513Manufacturing 123,387 120,416 -2,971 124,598 4,182

Construction 39,515 41,504 1,989 42,427 923Wholesale & retail trade 94,491 89,040 -5,451 96,470 7,430Hotels & restaurants 17,917 22,310 4,393 24,289 1,979

Public administration, education & health 121,738 120,772 -966 120,324 -448

Other 104,429 106,079 1,650 107,535 1,456

Total 615,962 627,129 11,167 648,773 21,644


Real GDP grows by 1.3% in the third quarter of 2010

Macedonia 13


Gross capital formation was boosted by increased construction work in the third quarter, along with government capital investments. The GVA of the construction sector grew by 18.4% year on year, following a decline of 12.1% in the second quarter. In addition to construction, a breakdown of GVA indicates that financial intermediation, wholesale and retail trade and agriculture performed well with growth of 3.8%, 2.7% and 2.4%, respectively.

It is likely that in the fourth quarter some seasonal agricultural jobs came to an end. This trend will probably continue in the first quarter of 2011. In this context, the performance of manufacturing to generate more jobs is important, and yet in October and November manufacturing output was fragile. It declined by 3.2% month on month in October, before increasing by 9.7% month on month in November.

Consumer price inflation rose by 3% year on year in December, the highest rate in 2010, owing in part to deflation in the base period and to small increases in important price categories, namely food, transport and household utilities. Nevertheless, inflation remains low and averaged just 1.6% year on year in 2010.

Although the upward pressure on food prices in Macedonia has so far been limited, it is an important indicator. Food prices constitute by far the largest category of the consumer price index (CPI), with a weighting of 40.2%. In December 2010 food prices rose by 3% year on year, after increasing slightly more rapidly by 3.3% in October and November.

Consumer price inflation, 2010 (% change year on year unless otherwise indicated)

Jun Jul Aug Sep Oct Nov Dec Weighting (%)Consumer price inflation 1.8 1.5 1.9 2.0 2.7 2.9 3.0 -Food & non-alcoholic beverages 0.9 0.2 0.9 2.2 3.3 3.3 3.0 40.2Alcohol & tobacco 0.1 0.0 -0.1 -0.1 1.1 1.1 1.0 4.5

Clothing & footwear 1.0 1.0 1.2 1.2 2.0 1.5 1.3 7.0Furnishings & household equipment 0.1 0.2 0.3 0.4 0.4 1.0 1.1 6.9

Health -0.7 0.7 1.8 1.6 1.5 1.4 2.2 2.9Transport 7.2 5.8 4.7 3.1 5.9 4.8 6.5 8.6Communications 0.0 0.1 0.4 -1.3 -1.6 -1.1 -1.2 4.3

Education 0.4 0.2 0.2 -8.9 -9.4 -9.4 -9.4 0.9Restaurants & hotels 0.2 0.0 0.1 -0.4 -0.3 1.2 0.9 5.2

Recreation & culture -0.1 1.6 2.6 0.2 -1.8 2.0 0.9 3.5Miscellaneous goods & services -0.1 0.1 -0.7 -0.4 -0.2 0.4 1.7 4.3

Housing, water, electricity, gas & other fuels 6.4 6.4 7.5 7.3 7.6 7.7 7.5 11.8


After contracting by 16% in 2009 as a consequence of plunging import demand during the recession, the merchandise trade balance continued to shrink during 2010. In January-November the deficit amounted to US$1.85bn, compared with US$2.11bn in the year-earlier period, according to preliminary data from the SSO, equivalent to a contraction of 12.3%. In November merchandise exports were worth US$336.5m, up by 32.4% year on year, owing largely to the weak base period, and 4% more than in October. After expanding strongly in October, imports grew by just 0.1% month on month in November to US$523.9m,

Current account records small deficit in January-October

Consumer price inflation averages 1.6% in 2010

14 Macedonia


bringing the year-on-year rate to 2.2% and producing a monthly trade deficit of US$187m.

After recording monthly surpluses in July-September, the current account posted a deficit of US$50.2m in October as a result of a larger trade deficit and lower net current transfers. The trade deficit of US$181.4m in October compared unfavourably with an average deficit of US$137 in July-September. Current net transfers were US$142.4m in October, a drop of 21% compared with the average of US$181 in July-September. Despite this decline, net current transfers remain high and represent a major support to the current-account balance.

In January-October the current-account deficit was US$109m, significantly smaller than the deficit of US$566m recorded in the year-earlier period. Given the trade deficit in November and traditionally lower current net transfers ahead of the Christmas holidays, the current-account deficit probably widened moderately in the fourth quarter.

Main drivers of the current account (US$ m)

Source: National Bank of the Republic of Macedonia.

-300

-200

-100

0

100

200

300Trade balanceCurrent transfers balanceCurrent-account balance

OctSepAugJulJunMayAprMarFebJan10

DecNovOctSepAugJulJunMayAprMarFebJan09

Dec2008

Macedonia 15


Data and charts Annual data and forecast

Pl ea se se e g ra p hi c b el ow

2006a 2007a 2008a 2009b 2010 b 2011c 2012c

GDP

Nominal GDP (US$ m) 6,371.2 7,668.8 9,297.3b 8,677.2 8,447.7 8,443.9 8,649.6

Nominal GDP (Den m) 310,915 343,025 389,277b 382,663 391,733 414,763 442,570

Real GDP growth (%) 4.3 5.9 4.8 -0.9 0.8 2.4 3.4

Expenditure on GDP (% real change)

Private consumption 5.4 7.2 5.8b -3.9 2.0 2.6 4.0

Government consumption 3.3 6.1 2.0b -6.4 -2.2 1.0 1.5

Gross fixed investment 8.1 17.8 6.0b 0.9 -8.0 4.5 7.0

Exports of goods & services 9.2 11.8 7.5b -10.7 16.0 5.5 6.5

Imports of goods & services 10.9 15.2 11.8b -11.1 9.5 6.0 7.5

Origin of GDP (% real change)

Agriculture 0.6 0.6 1.5b 3.5 1.0 2.5 3.5

Industry 3.6 1.7 4.0b -0.1 1.3 1.8 2.1

Services 6.9 6.4 5.9b -2.2 0.5 2.7 4.1

Population and income

Population (m) 2.0 2.0 2.0 2.1 2.1 2.1 2.1

GDP per head (US$ at PPP) 7,918b 8,611b 9,206b 9,198 9,325 9,694 10,157

Recorded unemployment (av; %) 36.0b 34.9b 33.8b 32.2 32.3 31.9 31.4

Fiscal indicators (% of GDP)

General government revenue 33.5 34.6 35.0b 33.6 33.8 34.3 34.8

General government expenditure 34.0 34.2 36.0b 36.4 36.3 36.7 36.8

General government balance -0.5 0.3 -1.0b -2.8 -2.5 -2.4 -2.0

Prices and financial indicators

Exchange rate Den:US$ (end-period) 46.45 41.66 43.56 42.67a 45.90 a 51.17 51.60

Exchange rate Den:� (end-period) 61.30 60.83 60.55 61.15a 61.50 a 61.40 61.40

Consumer prices (end-period; %) 2.9 6.1 4.1 -1.6a 3.0 a 3.1 3.3

Producer prices (av; %) 3.8 1.7 15.0 -6.5a 8.3 6.8 5.4

Stock of money M1 (% change) 17.9 30.7 14.5 -3.5a 4.5 8.0 10.0

Stock of money M2 (% change) 24.8 28.1 7.1 4.0a 5.8 10.0 12.0

Lending interest rate (av; %) 11.3 10.2 9.7 10.1a 9.5 8.7 8.6

Current account (US$ m)

Trade balance -1,261 -1,639 -2,573 -2,157a -2,009 -2,067 -2,133

Goods: exports fob 2,411 3,392 3,971 2,686a 3,366 3,814 4,048

Goods: imports fob -3,671 -5,030 -6,543 -4,842a -5,375 -5,880 -6,181

Services balance 29 34 12 40a 98 124 105

Income balance -34 -385 -115 -128a -160 -110 -114

Current transfers balance 1,237 1,383 1,456 1,599a 1,760 1,645 1,681

Current-account balance -29 -606 -1,220 -646a -311 -408 -461

External debt (US$ m)

Debt stock 3,284 4,161 4,678 5,500 5,523 5,492 5,552

Principal repayments 439 542 295 405 510 475 496

Interest 125 163 184 134 148 153 155

Debt service due 582 778 504 541 658 628 651

International reserves (US$ m)

Total international reserves 1,889 2,265 2,109 2,292a 2,177 2,012 2,004

a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.

Source: IMF, International Financial Statistics.

16 Macedonia


Quarterly data Pl ea se se e g ra p hi c b el ow

2008 2009 2010

4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr

Central government finance (Den m)

Revenue 34,498 31,298 31,780 31,785 33,635 29,522 32,321 36,133

Expenditure 48,733 33,231 35,357 33,008 37,797 33,626 34,293 36,643

Balance -14,235 -1,933 -3,577 -1,223 -4,162 -4,104 -1,972 -510

Output

Industrial production index (2005=100) 108.5 91.6 101.1 108.9 116.6 83.0 99.5 106.4

Employment, wages & prices

Total employment ('000) 609 618 636 643 623 616 627 649

Wages, net (Den per month) 17,081 19,653 20,116 19,891 20,172 20,303 20,557 20,465

Consumer prices (2000=100) 115.7 115.3 116.6 114.0 113.3 115.9 117.9 116.1

Consumer prices (% change, year on year) 5.5 0.9 -0.6 -1.4 -2.1 0.5 1.1 1.8

Producer prices (% change, year on year) 2.1 -6.2 -8.8 -9.9 -0.1 7.5 9.6 7.7

Financial indicators

Exchange rate Den:US$ (av) 46.6 47.1 45.1 42.8 41.4 44.5 48.4 47.8

Exchange rate Den:US$ (end-period) 43.6 46.6 43.5 42.0 42.7 45.6 50.5 45.3

Deposit rate (av; %) 6.4 6.7 6.8 7.3 7.4 7.4 7.2 7.0

Lending rate (av; %) 9.8 9.8 10.0 10.2 10.3 10.0 9.7 9.2

M1 (end-period; Den m) 54,119 46,791 47,635 47,909 52,223 50,274 52,527 53,772

M1 (% change, year on year) 14.5 5.2 -3.6 -4.5 -3.5 7.4 10.3 12.2

M2 (end-period; Den m) 178,885 174,959 175,763 178,596 185,984 187,153 195,173 195,366

M2 (% change, year on year) 7.1 4.0 -1.3 -2.9 4.0 7.0 11.0 9.4

Balance of payments (US$ m)

Goods exports fob 779.5 520.0 669.6 761.3 734.6 665.3 780.9 878.4

Goods imports fob -1,430.8 -1,101.3 -1,129.9 -1,190.4 -1,420.7 -1,075.4 -1,283.0 -1,311.7

Trade balance 665.1 -581.4 -460.3 -429.1 -686.1 -410.0 -502.1 -433.3

Services balance -23.0 -1.4 -1.7 33.0 10.1 8.7 27.3 15.1

Income balance -131.1 -36.2 -27.9 -25.2 -38.7 -59.3 -31.1 -39.7

Net transfer payments 277.4 168.0 355.8 568.4 507.0 357.3 444.1 542.1

Current-account balance -528.0 -451.0 -134.1 147.1 -207.6 -103.4 -61.8 106.2

Reserves excl gold (end-period) 1,920.3 1,479.0 1,492.1 2,005.4 2,050.9 1,925.4 1,814.4 2,014.0

Sources: National Bank of the Republic of Macedonia; Statistical Office of Macedonia, Monthly Statistical Bulletin; IMF, International Financial Statistics.

Macedonia 17


Monthly data Pl ea se se e g ra p hi c b el ow

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Exchange rate Den:US$ (av) 2008 41.7 41.6 39.5 38.9 39.4 39.4 38.8 40.8 42.5 45.8 48.2 45.8

2009 46.1 48.0 47.2 46.5 45.2 43.7 43.4 42.9 42.1 41.3 41.0 41.8

2010 42.8 44.8 45.4 45.9 48.8 50.4 48.3 47.7 47.3 44.4 45.0 46.6

Exchange rate Den:US$ (end-period) 2008 41.5 40.5 38.8 39.4 39.3 38.8 39.3 41.4 42.6 47.1 47.6 43.6

2009 46.8 48.0 46.6 46.3 44.3 43.5 43.5 42.9 42.0 41.4 41.0 42.7

2010 43.7 45.6 45.6 46.4 49.7 50.5 47.1 48.5 45.3 44.4 46.8 46.3

Deposit rate (%) 2008 5.4 5.5 5.6 5.5 5.7 5.8 5.9 6.0 6.1 6.2 6.5 6.5

2009 6.8 6.8 6.6 6.7 6.8 6.8 7.2 7.2 7.4 7.4 7.4 7.5

2010 7.3 7.5 7.5 7.4 7.1 7.0 7.1 7.0 6.8 6.7 6.7 n/a

Lending rate (%) 2008 9.8 9.7 9.7 9.6 9.6 9.7 9.6 9.6 9.6 9.7 9.8 9.8

2009 9.7 9.7 9.9 9.9 10.1 10.1 10.2 10.2 10.3 10.3 10.2 10.3

2010 10.2 10.0 9.8 9.8 9.6 9.6 9.2 9.2 9.2 9.1 9.1 n/a

M1 (% change, year on year) 2008 30.9 30.6 24.3 24.1 28.3 30.2 22.5 22.7 22.2 22.0 18.7 14.5

2009 11.3 7.1 5.2 1.2 -1.8 -3.6 -0.4 -0.9 -4.5 -0.2 -0.5 -3.5

2010 0.7 3.8 7.4 8.0 11.9 10.3 9.1 8.0 12.2 9.5 10.1 n/a

M2 (% change, year on year) 2008 27.9 26.0 23.1 21.3 21.0 19.6 18.4 20.1 19.7 16.0 9.6 7.1

2009 6.4 4.8 4.0 2.6 -0.3 -1.3 -3.0 -2.7 -2.9 1.0 4.5 4.0

2010 4.5 4.6 7.0 7.7 11.1 11.0 8.9 8.2 9.4 8.3 10.2 n/a

Industrial production (% change; year on year) 2008 13.6 7.0 -1.4 6.2 17.6 12.3 14.8 8.5 15.7 -9.9 -2.9 -10.1

2009 -16.7 -11.3 -4.8 -7.7 -15.3 -16.2 -19.8 -9.8 -9.8 -1.0 4.3 20.0

2010 -3.0 -13.1 -11.2 -9.6 -0.4 5.4 8.3 -1.5 -11.9 -4.4 -1.6 n/a

Consumer prices (av; % change, year on year) 2008 8.7 9.6 10.2 10.1 9.5 10.1 9.5 8.6 7.1 7.1 5.2 4.1

2009 1.7 0.7 0.2 -0.5 0.4 -1.7 -1.3 -1.4 -1.4 -2.4 -2.3 -1.6

2010 0.1 0.6 0.7 1.4 0.2 1.8 1.5 1.9 2.0 2.7 2.9 3.0

Total exports fob (US$ m) 2008 267 317 333 360 403 387 434 342 349 307 243 230

2009 150 175 195 205 224 241 262 231 268 233 253 248

2010 191 217 258 245 260 276 297 261 326 323 n/a n/a

Total imports cif (US$ m) 2008 438 512 528 582 624 669 695 557 508 545 450 436

2009 340 369 393 393 332 404 432 390 368 470 492 459

2010 315 343 417 455 402 426 441 451 404 504 n/a n/a

Trade balance fob-cif (US$ m) 2008 -170.5 -195.0 -194.7 -222.7 -220.6 -282.0 -261.5 -215.4 -158.9 -238.0 -206.7 -206.6

2009 -189.5 -194.4 -197.5 -188.5 -108.3 -163.5 -169.8 -158.9 -100.5 -236.5 -238.8 -210.8

2010 -124.3 -126.6 -159.1 -210.1 -141.9 -150.1 -143.5 -189.7 -78.1 -181.4 n/a n/a

Foreign-exchange reserves excl gold (US$ m) 2008 2,087.5 2,145.5 2,206.1 2,147.7 2,150.6 2,227.8 2,228.9 2,175.3 2,228.6 2,022.9 1,846.6 1,920.3

2009 1,654.2 1,589.0 1,479.0 1,410.3 1,439.9 1,492.1 1,757.0 1,942.8 2,005.4 2,066.9 2,121.1 2,050.9

2010 2,032.7 1,956.5 1,925.4 1,924.3 1,820.3 1,814.4 1,887.8 1,914.6 2,014.0 2,013.4 1,917.4 n/a

18 Macedonia


Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Central government budget revenue (Den m) 2008 10,011 9,560 13,563 10,808 10,513 10,368 11,917 9,765 15,410 11,748 11,288 11,462

2009 9,959 9,315 12,024 10,684 11,554 9,542 11,473 9,276 11,036 10,383 10,632 12,620

2010 9,249 8,867 11,406 11,266 10,499 10,556 14,423 10,651 11,059 10,735 10,574 n/a

Central government budget expenditure (Den m) 2008 8,453 10,316 10,106 10,369 10,973 10,604 11,013 8,301 11,397 11,658 14,184 22,891

2009 9,648 11,021 12,562 11,739 11,941 11,677 11,365 10,193 11,450 12,509 12,133 13,155

2010 11,567 10,606 11,453 11,924 11,411 10,958 13,567 10,847 12,229 11,868 11,516 n/a

Central government budget balance (Den m) 2008 1,558 -756 3,457 439 -460 -236 904 1,464 4,013 90 -2,896 -11,429

2009 311 -1,706 -538 -1,055 -387 -2,135 108 -917 -414 -2,126 -1,501 -535

2010 -2,318 -1,739 -47 -658 -913 -402 856 -196 -1,170 -1,133 -942 n/a

Sources: IMF, International Financial Statistics; Haver Analytics.

Macedonia 19


Annual trends charts Pl ea se se e g ra p hi c b el ow

Annual trends charts

Source: Economist Intelligence Unit. Source: Economist Intelligence Unit.

Budget balance (% of GDP)

Current-account balance (% of GDP)



Real GDP growth(% change)

Consumer price inflation(av; %)

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0 World East-central Europe Macedonia

1211100908072006-2.0

0.0

2.0

4.0

6.0

8.0

10.0 World East-central Europe Macedonia

1211100908072006

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0 East-central Europe Macedonia

1211100908072006-14.0

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0 East-central Europe Macedonia

1211100908072006

Main destinations of exports, 2009(share of total) (share of total)

Main origins of imports, 2009

Italy 8.1%

Others 51.9%

Germany 16.7%

Greece 10.8%

Serbia 12.5%

Serbia 7.9%

Others63.3%

Germany 10.3%

Russia 9.8%

Greece 8.7%

20 Macedonia


Monthly trends charts Pl ea se se e g ra p hi c b el ow

Monthly trends charts

Monetary aggregates (% change, year on year)

Government finances (Den m)

Exchange rate (Den :US$; av)

Foreign trade (US$ m; goods only)

Foreign-exchange reserves(US$ m)

Oil: Brent crude price (US$/b; av)

Source: Economist Intelligence Unit.Source: Economist Intelligence Unit.



1,300

1,400

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2,300

OctJulApr

Jan10

OctJulApr

Jan09

OctJulApr

Jan08

OctJulApr2007

20

40

60

80

100

120

140

OctJulApr

Jan10

OctJulApr

Jan09

OctJulApr

Jan08

OctJulApr2007

38.0

40.0

42.0

44.0

46.0

48.0

50.0

52.0

OctJulApr

Jan10

OctJulApr

Jan09

OctJulApr

Jan08

OctJulApr2007

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0 M2 M1

OctJulApr

Jan10

OctJulApr

Jan09

OctJulApr

Jan08

OctJulApr2007

-400

-200

0

200

400

600

800 Balance Imports Exports

OctJulApr

Jan10

OctJulApr

Jan09

OctJulApr

Jan08

OctJulApr2007

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

20,000

25,000 Balance Revenue Expenditure

OctJulApr

Jan10

OctJulApr

Jan09

OctJulApr

Jan08

OctJulApr2007

Macedonia 21


Comparative economic indicators Pl ea se se e g ra p hi c b el ow

Comparative economic indicators, 2009

Gross domestic product(US$ bn; market exchange rates)

Gross domestic product(% change, year on year)

Consumer prices(% change, year on year)

Sources: Economist Intelligence Unit estimates; national sources.

Sources: Economist Intelligence Unit estimates; national sources.Sources: Economist Intelligence Unit estimates; national sources.

Sources: Economist Intelligence Unit estimates; national sources.

Gross domestic product per head(US$ '000; market exchange rates)

0 20 40 60 80 100 120 140 160 180 200

Kyrgyz RepublicTajikistan

MoldovaTurkmenistan

ArmeniaMacedonia

GeorgiaAlbania

Bosnia and HercegovinaEstonia

LatviaUzbekistan

LithuaniaAzerbaijan

SerbiaBulgariaBelarus

SloveniaCroatia

SlovakiaKazakhstan

UkraineHungaryRomania

Czech RepublicPolandRussia

0.0 5.0 10.0 15.0 20.0 25.0

TajikistanKyrgyz Republic

UzbekistanMoldova

TurkmenistanGeorgiaUkraine

ArmeniaAlbania

MacedoniaBosnia and Hercegovina

AzerbaijanBelarus

SerbiaBulgaria

KazakhstanRomania

RussiaLithuania

PolandLatvia

HungaryCroatiaEstonia

SlovakiaCzech Republic

Slovenia

-2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

MacedoniaBosnia and Hercegovina

EstoniaMoldovaSlovenia

Czech RepublicAzerbaijan

SlovakiaGeorgiaAlbaniaCroatia

BulgariaArmenia

PolandLatvia

HungaryLithuaniaRomania

TajikistanKyrgyz Republic

KazakhstanSerbia

TurkmenistanRussia

BelarusUzbekistan

Ukraine

-20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0

LatviaUkraine

LithuaniaArmeniaEstonia

SloveniaRussia

RomaniaMoldovaHungary

TurkmenistanCroatia

BulgariaSlovakia

Czech RepublicGeorgia

SerbiaBosnia and Hercegovina

MacedoniaBelarus

KazakhstanPoland

Kyrgyz RepublicAlbania

TajikistanUzbekistanAzerbaijan

1,231.8430.5

-0.8

22 Macedonia


Country snapshot

Basic data

25,713 sq km

2,048,619 (end-2008 estimate)

Population in '000 (2002 census)

Skopje (capital) 467.3 Kumanovo 103.2 Bitola 86.4 Prilep 73.4 Tetovo 70.8 Veles 57.6

Continental

Hottest month, August, 25°C (average); coldest month, January, 1°C (average); driest month, February, 20 mm average rainfall; wettest month, April, 65 mm average rainfall

Macedonian (official); minority languages include Albanian (in official use where more than 20% of population is Albanian-speaking), Serbo-Croat, Turkish and Roma

Metric system

The denar was introduced on May 10th 1993; the National Bank of the Republic of Macedonia (NBRM, the central bank) has a target rate for the denar against the euro

One hour ahead of GMT in winter; two hours ahead in summer

Calendar year

January 1st (New Year), January 7th (Orthodox Christmas), April 24th-25th (Orthodox Easter), May 1st (Labour Day), May 24th (Saints Cyril and Methodius Day), August 2nd (Ilinden uprising/Day of the Republic), September 8th (Independence Day), September 11th (Ramazan Bajram), October 11th (People's Uprising against Fascism), October 23rd (Revolution Day), December 8th (Saint Kliment Ohridski)

When a Macedonian holiday falls on a weekend, the government informs the public, sometimes a few days before the holiday, that a different day will be the "observed" holiday.

Land area

Population

Climate

Weather in Skopje (altitude 240 metres)

Languages

Weights and measures

Currency

Time

Fiscal year

Public holidays

Main towns

Macedonia 23


Political structure

The former Yugoslav Republic of Macedonia (provisional, internationally recognised, pending resolution of name dispute with Greece)

Democratic parliamentary republic

Based on the constitution of November 17th 1991

Unicameral Assembly (Sobranie) of 120 members

Last parliamentary election: June 1st 2008; next election due in 2012 Last presidential election: March 22nd and April 5th 2009; next election due in 2014

President; currently Gjorge Ivanov, who was sworn in on May 12th 2009

Council of Ministers, headed by the prime minister. A coalition government led by the Internal Macedonian Revolutionary Organisation-Democratic Party of Macedonian National Unity was approved by parliament in July 2008

Governing parties: Internal Macedonian Revolutionary Organisation-Democratic Party of Macedonian National Unity (VMRO-DPMNE), Democratic Union for Integration (DUI), Socialist Party (SP), Party of United Macedonian Democrats (PODEM). Opposition parties: Social Democratic Alliance of Macedonia (SDSM), Democratic Party of Albanians (DPA), Party for a European Future (PEI), New Democracy (ND), New Social Democratic Party (NSDP).

Prime minister Nikola Gruevski (VMRO-DPMNE) Deputy prime minister (European integration) Vasko Naumovski (VMRO-DPMNE) Deputy prime minister & finance minister Zoran Stavreski (VMRO-DPMNE) Deputy prime minister Abdulaqim Ademi (DUI) Deputy prime minister (economic affairs) Vladimir Pesevski (VMRO-DPMNE)

Agriculture, forestry & water supply Ljupco Dimovski (SP) Defence Zoran Konjanovski (VMRO-DPMNE) Education & science Nikola Todorov (VMRO-DPMNE) Economy Fatmir Besimi (DUI) Environment & physical planning Nexhat Jakupi (DUI) Foreign affairs Antonio Milososki (VMRO-DPMNE) Health Bujar Osmani (DUI) Internal affairs Gordana Jankulovska (VMRO-DPMNE) Justice Mihajlo Manevski (VMRO-DPMNE) Labour & social policy Xhelal Bajrami (DUI) Local self-government Musa Xhaferi (DUI) Transport & communications Mile Janakieski (VMRO-DPMNE)

Trajko Veljanoski (VMRO-DPMNE)

Petar Gosev

Leading members of the government

Speaker of parliament

Key ministers

Central bank governor

Form of state

Legal system

National legislature

Elections

Head of state

National government

Main political parties

Official name

macedonia february 2011

Documents