Foreign investment in Macedonia has halved in the first five months of this year, when compared to the same period in 2008, National Bank data shows. Only 99 million euros were pumped into the local economy by foreign investors during this period, as opposed to 202 million euros last year. Month of May saw the highest monthly total, with 32 million euros in investments. Spending on the construction of the Johnson Mattey car parts factory near Skopje contributed nearly 80 percent of the foreign investment total for that month. Since the beginning of the global economic crisis, most companies have either frozen or cancelled their investment plans for the country. French car parts manufacturer Montupet, South Korean IT company Triview, and Slovenian home appliances producer Iskra are among the companies that have halted planned factory construction in Macedonia’s free economic zones.
In addition, some capital infrastructure projects have also been stopped. For example, Turkish airport construction and management company TAV postponed the modernisation of the country’s civil airports. Although the government still believes that the situation will improve by the end of the year, expecting minimal economic growth of one per cent, some observers, including the IMF, predict a two per cent contraction.
Analysis and forecast: increasing risk
The released data comes in line with expectations for a steady trend of decrease of foreign investment in Macedonia in the recent year. This trend adds weight and pressure to the criticisms against PM Gruevski’s government that it cannot handle the crisis in an effective manner. The cycle of growth of FDI to Macedonia ended in 2008 and ever since the local economy faces downward growth trend. Despite the optimism of the key figures in the administration it could be expected that the recovery process will be slower and the trend could be reversed only in 2010.