North Macedonia overview

GDP grew by a modest 2.1 per cent in 2022 as rising prices of some inputs, including of largely unregulated electricity prices for companies, and a slowdown in key external markets brought a contraction of industry and construction activity. Despite a strong increase in imports, reflecting the fallout from the energy crisis, external stability was maintained thanks to robust export performance, inflows of foreign direct investment and external financing. To ensure liquidity in the face of large gross financing needs in 2023, North Macedonia reached an agreement with the IMF in November 2022 on a two-year €530 million Precautionary and Liquidity Line (PLL) and returned to external markets in March 2023 via a four-year €500 million Eurobond, issued at a yield of 6.96 per cent. GDP growth is likely to remain modest in 2023 at around 2 per cent, before rising to 3 per cent in 2024 as the expected global recovery firms up. Despite a further increase in minimum wages from April 2023, increases in pensions and price caps on some basic goods, household demand is set to remain subdued in 2023 as high levels of inflation erode real incomes. The slowdown in the main trading partners will affect exports, while increased uncertainty and tighter financing conditions may weigh on investor confidence.