1

Republic of Macedonia

Country Overview CONTENTS

LOCATION .................................................... 1

GOVERNMENT AND POLITICAL SITUATION ... 2

INFRASTRUCTURE ........................................ 2

DEMOGRAPHY ............................................. 3

ECONOMY ................................................... 4

FOREIGN TRADE ........................................... 7

LOCATION

Republic of Macedonia is a small country located

in the center of the Balkan Peninsula. Its total

area is 25,713 square kilometers. The country is

bordered by Greece to the south, Serbia and

Kosovo to the north, Albania to the west and

Bulgaria to the east.

Approximately half of the country (49 per cent) is

agricultural land, while forests cover about 37 per

cent of the territory. The natural resources of

Macedonia include: zinc, lead, manganese, nickel,

chrome, copper, iron ore and wolfram. There are

also a large number of thermal springs.

Macedonia grows and distributes high quality

fruits and vegetables, and has a growing wine

industry. Tourism, particularly in rural areas,

represents another area for potential investment

and economic growth. Several other industries,

such as food processing, beverages, textiles,

chemicals, iron, steel, cement, energy and

pharmaceuticals create the foundation for the

country’s future economic development.

The country is situated on the crossroads of

South-east Europe, providing an important

link which connects four key regions in

Europe: Central Europe, the Aegean Sea, the

Black Sea and the Adriatic Sea.

2

GOVERNMENT AND POLITICAL SITUATION

Macedonian political system is based upon

parliamentary democracy. The parliament

consists of 120 representatives, which are elected

every four years.

At the head of the government is the prime

minister who is elected by the political party or

coalition of political parties that has most seats in

the parliament.

The President of Macedonia represents the

country, and is Commander-in-Chief of the armed

forces. The president is elected through general

elections every five years, and can hold the role

for a maximum of two terms.

The Macedonian Parliament

The court hierarchy is headed by the Supreme

Court, followed by a constitutional court, local

court and appellation courts.

Over the past ten years, the Macedonian

government and citizens have maintained

political stability after the Ohrid Framework

Agreement ended the conflict in 2001. The peace

agreement has successfully helped maintain

domestic security and the development of

Macedonia as a multi-ethnical country.

Macedonia became a member of the UN in 1993.

The highest strategic interest and priority of the

Government and the citizens is the membership

to the European Union and NATO. Macedonia

has a candidate status for EU membership since

2005 and is included in the NATO Membership

Action Plan since 2006.

The Macedonian Government

INFRASTRUCTURE

Road Infrastructure

The backbone of Macedonia’s road network is

comprised of the two Pan-European corridors:

the North-South Corridor X and the East-West

Corridor VIII. The overall road network consists

of over 13 thousand kilometers of roads, which

are continuously upgraded and maintained.

Railways

The railways network consists of 900 kilometers

of normal gauge track lines. The main railway

line is the north-south line which connects the

Macedonian railway network system to the

railway network systems of Serbia and Greece.

Airports

Macedonian airport system is composed of two

international airports - "Alexander the Great" in

Skopje and "St. Paul the Apostle” in Ohrid. There

are regular direct connections to several major

European cities.

Maritime

As a land-locked country, the access to sea is

achieved through the seaports in the neighboring

countries. The closest ports are in Thessaloniki

(Greece) and in Durres (Albania).

3

Telecommunications

The telecommunications sector in Macedonia has

shown a significant growth over the last 10 years.

The system consists of modern digital fixed-line

and mobile-cellular telephone subscribership.

There is an excellent access to Internet offered by

several telecom providers.

Resen

Bitola

Prilep

Strumica

Radovis

Berovo

Delcevo

Stip

Kocani

Veles

Negotino

Probistip

Kratovo

Valandovo

Vinica

Tetovo

Gostivar

Debar

Kicevo

Krusevo

Makedonski

Brod

Struga

Sveti

Nikole

Kriva

Palanka

Kumanovo

OhridGevgelija

Skopje

Kavadarci

0 10 20 30 40 km

Fig: Macedonia Map

DEMOGRAPHY

Population

According to the data from the last census,

carried out in 2002, the population of the

Republic of Macedonia is 2,022,547 inhabitants, a

3.9% increase from the previous census in 1994.

According to the estimates made by the State

Statistical Office (Statistical Yearbook of the

Republic of Macedonia 2014, State Statistical

Office), the total population in 2012 was

2,064,000 inhabitants.

The majority of the population lives in urban

areas (57.8 per cent). Official statistics note that

approximately 25 per cent of Macedonians reside

in the capital Skopje, although informal estimates

suggest the actual figure is closer to one third of

the total population. Other major cities include

Bitola (122,550), Kumanovo (104,842), Prilep

(86,246) and Tetovo (72,915).

Structure of population by age

The proportion of young and old people in

Macedonia is one of the most important aspects

of the population, which will shape the course of

the country’s development. The percentage of

the elderly population is raising, from 8.5 per

cent in 1994 to 11.6 per cent in 2009, while the

proportion of those between 0 and 14 years old

has decreased from 33.2 per cent in 1994 to 17.7

per cent in 2009.

4

From the age structure point of view, in regard to

range of age of people capable for work, the

situation in the Republic of Macedonia is

relatively positive, and this age group is still

dominant compared to the other two groups.

Migrations

Republic of Macedonia is characterized as a

region of high migrations, both internally and

externally. The internal migrations are with

different intensity in various time periods, and in

principle, they are in the direction rural area –

cities, mostly to Skopje. The highest wave of

migrations took place in the 60-ies and early 70-

ies of the 20-th century.

Graph: Structure of population by age groups, Republic of Macedonia Source: Statistical Yearbook 2014, State Statistical Office

ECONOMY

Gross Domestic Product

Macedonia endured many challenges and

difficulties during the transitional period when it

introduced political and economic reforms to

build a democratic society and open market

economy. The result has been political and

macroeconomic stability that leaves room for

growth.

In the last several years, Macedonia created

attractive business environment in the segment

of tax policy, to enable more favorable economic

conditions for the investors. The corporation tax

rate is 10 per cent, the personal income tax is 10

per cent and the Value Added Tax is 18% (5% for

the products with preferential rate, such as food

products, publications, water supply and water

for irrigation, medicine, computers, agro-

mechanization, fertilizers, etc.). These levels of

taxation are among the lowest in Europe.

Table: Gross Domestic Product by year

2007 2008 2009 2010 2011 2012 2013*

GDP at current prices (in million denars) 372 889 414 890 414 622 437 296 464 187 466 703 499 559

GDP per capita in Euros (at current exchange rate) 2 982 3 308 3 300 3 459 3 665 3 680 3 930

GDP in million Euros (at current exchange rate) 6 095 6 772 6 767 7 109 7 544 7 585 8 112

GDP real growth rates in % 6.5 5.5 -0.4 3.4 2.3 -0.5 2.7

GDP deflator 104.6 105.5 100.3 102.0 103.7 101.0 104.3

Source: Republic of Macedonia - State Statistical Office, Gross Domestic Product, News Release No: 3.1.14.06

* Preliminary data

5

Photo: Macedonian money

Unemployment

The unemployment is one of the largest problems

in Macedonia. The rate of unemployment, which

reached 37.3 per cent in 2005, has since

decreased to 29 per cent in 2013.

Exchange rates

The stability of the Macedonian denar has helped

secure the right economic conditions for a

successful business environment.

1 Euro = 61.6950 denars

1 $ US = 49.4549 denars (November 2014, www.nbrm.mk)

Main Economic Activities

The country’s main economic activities include:

- Tourism

- Agriculture

- Fruits and Vegetables Processing

- Textiles

- Light Manufacturing

- Production of Steel Products, etc.

Tourism

Due to its geographical diversity, Macedonia has

a large number of natural attractions for tourists,

such as mountains, rivers and lakes.

Mavrovo National Park is located in the western

part of the country offering skiing in the winter

and during summertime.

Macedonia’s lakes – such as Prespa, Dojran and

Ohrid – are major tourist destinations throughout

the year, especially in the summer.

There are more than 60 thermal springs, with

many offering spas and all inclusive well-being

packages.

Photos: Mavrovo

Photos: Lake Ohrid

6

Agriculture

The agriculture sector plays an important role in

the Macedonian economy. It contributes to

approximately 12 per cent of total GDP and

provides opportunities for employment, trade

and the development of the rural economy.

The main agricultural products are grapes,

peppers, tomatoes, cucumber, cabbage,

sunflower, rice, sour cherries, apples etc.

Photos: Agricultural production

Fruits and Vegetables Processing

Fruit and vegetable processing industry is a key

constituent within the Macedonian agribusiness

sector. The industry, highly labor intensive, is

export oriented and has continuously increased

production levels and export value over the last

decade.

Textiles

Macedonian Textile and Garment Industry is one

of the most developed industries in the Republic

of Macedonia. It is very important industry

segment, with over 1,100 companies actively

involved in various levels of production. The

industry has about 35,000 employees and exports

over 400 million Euro worth of garments.

The companies within this industry have

produced for a large number of well-known

worldwide brands including: Versace, Diesel,

Gucci, Gerry Weber, Betty Barclay and MaxMara

among many others.

Photos: Garments and Textiles Production

Foreign Direct Investments

Over the last 10 years, Macedonian economy had

successfully attracted foreign direct investments.

There is a large number of international

companies that have started operations in the

country, both as green-field projects and through

different types of asset acquisition and

privatization, including: Johnson Matthey (UK),

Mobilkom Austria (Austria), EVN (Austria),

Deutsche Telecom (Germany), Kromberg &

Schubert (Germany), Dräxlmaier Group

(Germany), Van Hool (Belgium), Societe Generale

(France), Johnson Controls (USA), KEMET

Corporation (USA), the National Bank of Greece

(Greece), Hellenic Bottling Company S.A.

(Greece), QBE Insurance Group Limited (United

Kingdom), Mittal Steel (Netherlands), Duferco

(Switzerland) and Titan Group (Greece).

7

Free Economic Zones

The Law on Free Economic Zones (FEZ) was

implemented in 1999 and approved by the

government in August the following year. The

Directorate for Technological Industrial

Development Zones was officially launched in

January 2002. Currently, the FEZs are open only

for foreign investors.

The first investment in the Free Economic Zones

was started at the end of 2006, by Johnson

Controls, an automotive industry electronic parts

company, which was put into operation at the

end of 2007.

In the beginning of 2010, the second investment

in the FEZ was made by Johnson Matthey

(production of catalytic converters for the

automotive industry).

During 2011, 2012 and 2013, several other

companies announced and started their

investments in the FEZs.

FOREIGN TRADE

Through the process of international integration,

the Macedonian government established a large

number of multilateral and bi-lateral agreements,

which have helped to liberalize trade with global

partners. Such agreements include those with

World Trade Organization, the EU, the Central

European Free Trade Agreement (CEFTA), Turkey

and Ukraine.

According to the Macedonian State Statistical

Office, in 2013 exports amounted to USD 4.2bn

while imports stood at USD 6.6 bn. (leaving a

trade deficit of USD 2.4bn).

The majority of Macedonia’s exports (73 per cent

in 2013) are sold to the EU 27, with over one

quarter of export trade conducted with the

westerns Balkans. The biggest trade partners are

Germany, Bulgaria, Greece, Serbia and Kosovo,

which together account for 61 per cent of all

foreign trade. Over one half of imports (62.6 per

cent) are made from EU 27.

Imports

The majority of Macedonia’s imported goods are petroleum oils, platinum, electrical energy.

Table: Main products imported in 2013

Product Quantity in

tons

Value

in '000 US$

Structure

(participation

in total value)

Total 5 509 147 6 599 824 100,0

Petroleum oils and oils obtained from bituminous minerals (other than crude) and preparations

n.e.s., containing by weight 70% or more of petroleum oils or of oils obtained from bituminous

minerals, these oils being the basic constituents of the preparations, other than waste oils

698 801 663 865 10,1

Platinum and platinum alloys, unwrought or in powder form 8 403 879 6,1

Electric current 0 170 094 2,6

Flat-rolled products of iron or non-alloy steel, not clad, plated or coated, not further worked than

hot-rolled of a width of 600 mm or more, in coils 275 142 161 385 2,4

Motor vehicles for the transport of persons, n.e.s. 43 799 136 642 2,1

Other metals of the platinum group and alloys thereof, unwrought or in powder form 5 118 767 1,8

Paints and varnishes (incl. enamels and lacquers) based on synthetic polymers or chemically

modified natural polymers, dispersed or dissolved in a non-aqueous medium; plastics in solution 4 030 102 881 1,6

Nickel ores and concentrates 1 259 734 100 006 1,5

Medicaments, n.e.s., put up in measured doses or in forms or packing for retail sale 3 006 77 563 1,2

Ceramic wares for laboratory, chemical or other technical uses; ceramic troughs, tubs and similar

receptacles of a kind used in agriculture; ceramic pots, jars and similar articles of a kind used for the

conveyance or packing of goods

2 465 65 034 1,0

Natural gas, in the gaseous state 93 577 60 506 0,9

Poultry cuts and offal, frozen 35 378 57 237 0,9

Colloidal precious metals; compounds, inorganic or organic, of precious metals, whether or not

chemically defined; amalgams of precious metals 2 54 096 0,8

8

Product Quantity in

tons

Value

in '000 US$

Structure

(participation

in total value)

Telephone sets, including telephones for cellular networks or for other wireless networks 111 51 990 0,8

Bars and rods of iron or non-alloy steel, containing indentations, ribs, grooves or other deformations

produced during the rolling process or twisted after rolling 76 000 48 840 0,7

Other knitted or crocheted fabrics, n.e.s. 5 488 48 837 0,7

Petroleum oils and oils obtained from bituminous minerals, crude 51 512 45 821 0,7

Reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound

or video recording or reproducing apparatus 1 198 41 357 0,6

Other food preparations 9 742 40 744 0,6

Other woven fabrics, containing 85% or more by weight of cotton, bleached, dyed, printed or

otherwise finished, weighing not more than 200 g/m2, of yarns of different colors

1 495 37 005 0,6

Polyethylene, having a specific gravity of 0.94 or more 21 735 36 868 0,6

Surface-active, washing or cleaning preparations, n.e.s., put up for retail sale 29 075 36 182 0,5

Parts of the machines and apparatus of subgroups 743.5 and 743.6 of filtering or purifying

machinery and apparatus 1 292 35 531 0,5

Leather further prepared after tanning or crusting, including parchment-dressed leather 822 31 178 0,5

Sunflower crude oil 26 501 31 112 0,5

Other electric conductors, for a voltage not exceeding 1 000 V 4 458 29 587 0,4

Textile fabrics impregnated, coated, covered or laminated with plastics, other than those of heading

657.93 1 817 29 178 0,4

Articles for the conveyance or packing of goods, n.e.s; stoppers, lids, caps and other closures, of

plastics 9 859 28 489 0,4

Meat of swine, frozen 10 333 28 328 0,4

Other beet or cane sugar and chemically pure sucrose, in solid form, other 47 658 28 325 0,4

Other coal, not agglomerated 157 774 27 541 0,4

Motor vehicles for the transport of goods, n.e.s. 6 870 26 706 0,4

Butanes, liquefied 29 648 26 292 0,4

Meat of bovine animals, fresh or chilled, with bone in 6 682 26 202 0,4

Portable automatic data processing machines, weighing not more than 10 kg, consisting of a least a

central processing unit, a keyboard and a display 205 25 308 0,4

Other apparatus for transmission or reception of voice, images or other data, including apparatus for

communication in a wired or wireless network (such as a local or wide area network) 244 25 224 0,4

Antisera and other blood fractions and modified immunological products; vaccines for human and

veterinary medicine 48 24 221 0,4

Bars and rods, hot-rolled, in irregularly wound coils, of iron or other alloy and non-alloy steel, n.e.s 36 029 23 796 0,4

Semi-finished products of iron or non-alloy steel, containing by weight less than 0.25% of carbon

other, of rectangular (other than square) cross-section 46 317 23 790 0,4

Other primary forms of iron (other than iron of heading 671.33) or non-alloy steel 43 758 23 654 0,4

Glazed ceramic flags and paving, hearth or wall tiles; glazed ceramic mosaic cubes and the like,

whether or not on a backing 54 800 23 456 0,4

Road tractors for semi-trailers 4 168 23 353 0,4

Propane, liquefied 25 922 22 423 0,3

Waters (including mineral waters and aerated waters) containing added sugar or other sweetening

matter or flavoured, and other non-alcoholic beverages, n.e.s. 32 486 21 705 0,3

Other food preparations containing cocoa, in blocks, slabs or bars, whether or not filled 4 391 20 911 0,3

Sanitary towels and tampons, napkins (diapers) and napkin liners for babies and similar sanitary

articles, of paper pulp, paper, cellulose wadding or webs of cellulose fibres 5 108 19 822 0,3

Other wheat (including spelt) and meslin, non-milled 65 528 19 821 0,3

Other generating sets 2 422 19 362 0,3

Refined sunflower oil and fractions thereof 13 937 19 004 0,3

Other woven cotton fabrics, containing less than 85% by weight of cotton, mixed mainly or solely

with man-made fibres, bleached, dyed printed or otherwise finished, weighing more than 200 g/m2,

dyed

1 063 18 815 0,3

Source: State Statistical Office of Republic of Macedonia, Statistical Yearbook 2014

About 66 per cent of all imports are made from: Great Britain (11 per cent of all exports in 2013), Greece

(10 per cent), Germany (10 per cent), Russia (10 per cent), Serbia (8 per cent), Italy (6 per cent), China (6

per cent) and Bulgaria (5 per cent).

9

Exports

On the basis of value, Macedonia’s most exported goods are catalytic converters, ferronickel, products of

steel, garments and oil derivatives.

Table: Main products exported in 2013

Product Quantity

in tons

Value

in '000 US$

Structure

(partici-

pation in

total value)

Total 2 578 774 4 266 861 100,0

Supported catalysts with precious metal or precious metal compounds as the active substance 3 723 589 334 13,8

Ferro-nickel 94 714 336 685 7,9

Filtering or purifying machinery and apparatus for gases, n.e.s. 1 353 266 995 6,3

Tobacco, not stemmed/stripped 25 465 153 023 3,6

Flat-rolled products of iron or non-alloy steel, not clad, plated or coated, not further worked than hot-

rolled of a width of 600 mm or more, not in coils 146 524 98 841 2,3

Men's or boys' shirts of cotton, not knitted or crocheted 2 237 88 677 2,1

Ferro-silicon 71 956 87 391 2,0

Boards, panels (including numerical control panels) consoles, desks, cabinets and other bases,

equipped with two or more apparatus of subgroups 772.4 or 772.5, for electrical control or the

distribution of electricity: for a voltage not exceeding 1 000 V

539 83 827 2,0

Women's or girls' trousers, bib and brace overalls, breeches and shorts, not knitted or crocheted 2 678 83 753 2,0

Women's or girls' blouses, shirts and shirt-blouses, not knitted or crocheted 1 755 81 911 1,9

Petroleum oils and oils obtained from bituminous minerals (other than crude) and preparations n.e.s.,

containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals,

these oils being the basic constituents of the preparations, other than waste oils

79 341 81 515 1,9

Flat-rolled products of iron or non-alloy steel, painted, varnished or coated with plastics of a width of

600 mm or more 54 769 76 340 1,8

Lead ores and concentrates 54 266 72 938 1,7

Wine of fresh grapes (other than sparkling wine); grape must with fermentation prevented or arrested

by the addition of alcohol 88 905 67 508 1,6

Copper ores and concentrates 51 838 64 901 1,5

Other tubes and pipes, welded, of non-circular cross-section 87 682 62 746 1,5

Men's or boys' trousers, bib and brace overalls, breeches and shorts, not knitted or crocheted 2 008 58 175 1,4

Medicaments, n.e.s., put up in measured doses or in forms or packings for retail sale 2 295 57 001 1,3

Other catalyts and catalytic preparations 813 49 005 1,1

Flat-rolled products of iron or non-alloy steel, plated or coated with zinc otherwise plated or coated, of

a width of 600 mm or more 44 802 44 784 1,0

Other electric conductors, for a voltage not exceeding 1 000 V 5 141 41 060 1,0

Women's or girls' blouses, shirts and shirt-blouses, knitted or crocheted, knitted or crocheted 1 898 39 440 0,9

Women's or girls' jackets and blazers, not knitted or crocheted 867 38 722 0,9

Men's or boys' jackets and blazers, not knitted or crocheted 844 37 990 0,9

Other bakers' wares 16 057 37 827 0,9

Footwear, n.e.s., with outer soles of leather 1 487 36 081 0,8

T-shirts, singlets and other vests, knitted or crocheted 1 615 33 648 0,8

Zinc ores and concentrates 56 810 28 818 0,7

Other tubes and pipes, welded, of circular cross-section 34 606 28 353 0,7

Cigarettes containing tobacco 3 057 28 126 0,7

Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen 11 456 22 801 0,5

Tubes, pipes and hoses, rigid 10 236 22 349 0,5

Articles of apparel, men's or boys', not knitted or crocheted, n.e.s 969 21 834 0,5

Parts of footwear; removable insoles, heel cushions and similar articles; gaiters, leggings and similar

articles, and parts thereof 421 21 808 0,5

Other parts and accessories of the motor vehicles of groups 722, 781, 782 and 783 2 932 20 250 0,5

Marble, travertine, ecaussine and other calcareous monumental or building stone of an apparent

specific gravity of 2.5 or more and alabaster, whether or not roughly trimmed or merely cut, by sawing

or otherwise, into blocks or slabs of a rectangular shape

63 538 19 341 0,5

Ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft or ships 392 19 184 0,4

Seats, n.e.s. with wooden frames 5 697 18 729 0,4

Grapes, fresh 36 558 18 182 0,4

Ferrous waste and scrap, n.e.s. 63 466 18 012 0,4

Parts of the seats of subgroup 821.1 2 550 17 734 0,4

Women's or girls' dresses, not knitted or crocheted 364 17 376 0,4

Apples, fresh 77 070 17 208 0,4

Sweet biscuits, waffles and wafers, gingerbread and the like 6 957 16 349 0,4

10

Product Quantity

in tons

Value

in '000 US$

Structure

(partici-

pation in

total value)

Meat of sheep, fresh or chilled 2 757 16 331 0,4

Vegetables, fruit, nuts and other edible parts of plants, prepared or preserved by vinegar or acetic acid 12 715 16 035 0,4

Sausages and similar products, of meat, meat offal or blood; food preparations based on these

products 6 403 15 949 0,4

Tubes, pipes and hoses, not reinforced or otherwise combined with other materials, with fittings 6 628 15 871 0,4

Women's or girls' skirts and divided skirts, not knitted or crocheted 499 15 869 0,4

Motor vehicles for the transport of 10 or more persons, including the driver, with compression-ignition

internal combustion engine (diesel or semi-diesel) 854 15 765 0,4

Source: State Statistical Office of Republic of Macedonia, Statistical Yearbook 2014

The main export partners for the Macedonian economy are Germany (36 per cent of all exports in 2013),

followed by Bulgaria (8 per cent), Serbia (6 per cent), Kosovo (6 per cent), Italy (6 per cent), Greece (5 per

cent) and Croatia (2 per cent).