Economic Outline

Economic Indicators

North Macedonia is the poorest of the former Yugoslav republics; however, it has made significant progress in expanding its economy over the past decade: GDP grew an average of 5% annually between 2004 and 2008, driven mainly by domestic consumption and exports (notably metals and textile products). However, following a subdued post-pandemic recovery, economic growth has decelerated due to weakened external demand and more restrained household consumption. After growing a mere 1% in 2023, real GDP growth in 2024 reached 2.8%, surpassing estimates due to robust government spending and investment despite external challenges. The weak external demand observed in 2024 is expected to continue in 2025, influenced by structural shifts in the European automotive sector. In the long term, high emigration, particularly among the youth, is projected to reduce potential growth, which the IMF estimates at 3%.

North Macedonia recorded a general government deficit of an estimated 4.6% of GDP in 2024, primarily due to higher-than-expected revenues (driven by strong economic and wage growth) and some under-execution of capital expenditures (Fitch Ratings), while public debt continued to rise, surpassing 60% of GDP in 2024—14 percentage points above pre-pandemic levels. Authorities have not fully implemented the Organic Budget Law (OBL) in 2025, with adoption now expected to begin in 2026. The 2025 budget targets a 4% of GDP deficit, exceeding the OBL’s 3% limit. Officials cite significant capital expenditures and defence spending in 2025 as factors limiting fiscal consolidation. North Macedonia also drew EUR 265 million (1.7% of 2024 GDP) from the two-year IMF Precautionary Liquidity Line, which expired in November 2024. In January 2025, authorities fully repaid a EUR 500 million (3% of 2025F GDP) Eurobond by securing a sovereign loan from Hungary. Another EUR 500 million loan from Hungary, obtained in October 2024, is being used for budgetary purposes and on-lending through the Development Bank of North Macedonia. Meanwhile, average consumer prices increased by 3.5% in 2024, following a 9.4% rise the previous year (official governmental data). The rate is projected to stay above or around 3% in 2025, before slowing to a long-term average of 2% thereafter. While EU accession talks have faced obstacles due to Greece's historical dispute over the country's name, both the EU and Greek authorities commended North Macedonia's parliament for changing it to the Republic of North Macedonia. Moreover, North Macedonia's EU accession talks have faced delays due to bilateral disputes with Bulgaria. In July 2022, the country began negotiations after agreeing to a French proposal, which included a commitment to amend its constitution to recognize Bulgarians. However, political resistance has hindered progress. In September 2024, the EU decoupled North Macedonia's accession path from Albania due to unresolved issues, further stalling negotiations. The EU has stressed the need for bipartisan support in North Macedonia to move forward, and as of 2025, the country's EU membership remains uncertain, dependent on resolving internal challenges.

Unemployment remains structurally high at 11.9% at end-2024, driven by skills shortages and uneven regional development; however, much of the workforce is employed in the informal economy, thus the exact level of unemployment is hard to assess. Between 2004 and 2023, the population declined by 9.3%. Strong wage growth, averaging 13% annually in 2022–24, has led to some of the highest wages in the Western Balkans. According to the latest figures from the World Bank, about 17.6% of North Macedonian citizens live below the poverty line (USD 6.85 in 2017 PPP). The country’s GDP per capita (PPP) was estimated at USD 26,911 in 2024 by the IMF; nevertheless, the income ratio between the richest and poorest 20% of the population is more than eight times, the highest in the EU.

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