Macro Developments of MACEDONIA Presented by: Denislav Dyakov Magdalena Tsolova

Overview of Macedonian economic situation  vulnerable to economic developments in Europe and the Region  the least developed of the Yugoslav republics  Started maintaining economic stability recently

Goods Market – GDP Growth by sectors: For 2007: - retail sector – 10.2% - construction - 9.7% - agriculture – 7.2% - industrial output – 8.3% GDP by sectors: - agriculture – 11.4% - industry – 27.2% - services -61.4% GDP(PPP) – $18.97bil

Goods Market – GDP cntd.

Goods Market - BoP Current Account: Goods: Imports: Exports: Services: (Net) Current Transfers: Capital Account: Financial Account: * Central European Free Trade Agreement (CEFTA)

Goods Market - FDI FDI 2006(in millions) : €345 FDI 2007(in millions) : €240 Most important contributors to FDI in Macedonia: –Austria – 27.4% –Slovenia – 16.1% –Bulgaria – 13.8% –France – 9.1%

Banking System Banking system in the Republic of Macedonia comprises 18 banks and 12 saving houses Main features  Banking activities in the Republic of Macedonia are regulated under the Banking Law  There are no legal obstacles for entrance of foreign banks in the Macedonian financial market;  Foreign banks are also enabled to perform financial activities in the Republic of Macedonia by opening their branches;

Asset Market  High inflation increase in 2008  Sharp increase in foreign exchange reserves in 2007  Increased credit growth  Credit control through increased reserve requirements or capital requirements on risky loans

Labour Market  37% official rate of unemployment  “grey” economy  Problems with human capital Unemployment by duration Less then a month 12,4519,6005, ,33616,70018, ,83420,70021, ,10818,40020, ,40710,60014,399 2 years 3,1952,1002,614 3 years 24,39936,90027,791 More than 4 years 157,982200,900198,955 Long term unemploy ment 83.33%85.12%85.43% Discouraged workers 63.38%65.59%65.43%

Conclusions: The Global Financial Crisis will have a negative effect on the following issues: –Transition from planned economy to a liberal market economy. –Shrinking domestic market(Greek trade embargo & Western Trade embargo, decreased demand) –Worsen business climate, lower FDI

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