1. Macro Developments of MACEDONIA Presented by: Denislav Dyakov Magdalena Tsolova

2. 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

3. 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

4. Goods Market – GDP cntd.

5. Goods Market - BoP 20072008 Current Account: -596.83-1.209.55 Goods:-1.629.75-2.551.83 Imports:-4.979.24-6.522.69 Exports: 3.349.49 3.970.86 Services: (Net) 34.98 2.17 Current Transfers: 1.382.96 1.448.28 Capital Account:4.91 -18.42 Financial Account:633.93 1.227.94 * Central European Free Trade Agreement (CEFTA) 2007 20072008

6. 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%

7. 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;

8. 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

9. Labour Market  37% official rate of unemployment  “grey” economy  Problems with human capital Unemployment by duration 200020032004 Less then a month 12,4519,6005,207 1-512,33616,70018,513 6-11 18,83420,70021,342 12-17 12,10818,40020,466 18-23 20,40710,60014,399 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%

10. 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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