Country Report Macedonia

Summary

The incumbent Internal Macedonian Revolutionary Organisation-Democratic Party of Macedonian National Unity (VMRO-DPMNE) is set to claim a majority of seats in the next parliament, after the general election on June 1st.
However, violence and corruption tarnished the vote; along with worsening relations between the main ethnic Albanian parties, this suggests that domestic political stability will be more elusive in the coming years.
The VMRO-DPMNE’s ability to execute its reform agenda will be boosted by the party's strong election showing, but it will still need the support of at least one of the main ethnic Albanian parties to pass EU-mandated reforms.
A rerun of voting in 22 ethnic Albanian districts will determine whether the Democratic Union for Integration (DUI), or the Democratic Party of Albanians (DPA) can claim to represent the political will of ethnic Albanians.
A re-elected VMRO-DPMNE will continue to make the attraction of more foreign direct investment (FDI) a priority of economic policy in 2008-09.
The Economist Intelligence Unit projects annual average real GDP growth of just over 5% in 2008-09, with regulatory and institutional constraints preventing higher growth.
We expect a current-account deficit of 6-7% of GDP in 2008. High international oil prices will keep import costs up during the forecast period, since oil is Macedonia's single largest import category.

According to partial results, the VMRO-DPMNE of the prime minister, Nikola Gruevski, won 48% of the vote in the June 1st parliamentary election, and is set to be rewarded with a parliamentary majority.
The poll was marred violence, mostly in ethnic Albanian districts, culminating in several injuries and a fatality. Voting will have to take place again in many ethnic Albanian districts because of violence and irregularities.
In May a second fixed-line operator, Ontel, started to offer telecommunications services in the local market. Ontel immediately announced lower rates for national and international calls.
Consumer price inflation picked up to 10.1% year on year in April. However, in month-on-month terms, inflation fell, suggesting that the inflationary upturn that began in August 2007 may have started to wane.
In January-February 2008 the current-account deficit was US$162m, largely because of a deterioration in the trade balance, driven by high energy prices.