Macedonia’s economy will probably emerge from recession in 2010, with GDP growing by 2% for the year, according to the International Monetary Fund (IMF)’s latest annual review.
*Provisional data; ** Estimated data.
Source: National Bank of Macedonia, State Statistical Office
Analysis and Forecast: Decreasing Risk
Macedonia’s economy was battered in 2009 by lower demand for its exports and a decrease in external financing and investment. Tax revenues shrank and the central bank's foreign exchange reserves dropped significantly. However, the Macedonian government took prudent fiscal and monetary steps that helped cushion the impact of the global financial crisis. The government cut plans to raise spending and issued euro-denominated bonds worth €175 million, helping increase forex reserves and ensuring sufficient financing for the budget. Macedonia’s economic downturn was therefore relatively modest.
In 2010, the biggest challenges for Macedonia’s economy remain its large current-account and budget deficits. Discipline in public spending and in fiscal policy will be indispensable in order to maintain macroeconomic stability. If Macedonian authorities manage to reduce the risks of instability and continue the structural reforms – particularly in public administration and the judiciary – the country’s competiveness will greatly improve and the economy will recover from the crisis more quickly.