Country Report Macedonia February 2009

Outlook for 2009-10

• The ruling Internal Macedonian Revolutionary Organisation-Democratic Party of Macedonian National Unity (VMRO-DPMNE) remains in a strong position ahead of the presidential and local elections scheduled for late March.
• The candidate of the VMRO-DPMNE, Gjorge Ivanov, is generally viewed as the favourite to win the presidential race.
• Relations with Greece are set to come under greater strain, following Macedonia's appeal to the International Court of Justice (ICJ) over what is in effect Greece's veto on Macedonian NATO accession.
• The risks to macroeconomic stability have increased after parliament adopted the 2009 budget with an increased deficit target, brushing aside the IMF's advice.
• The Economist Intelligence Unit forecasts a sharp slowdown in annual average real GDP growth, to 1.5% in 2009-10, owing to reduced import demand in the euro zone and great difficulties in accessing foreign finance.
• We expect a widening of the current-account deficit to 14.6% of GDP in 2008, although this is forecast to drop to an average of around 10% in 2009-10 as a result of reduced import demand and lower international oil prices.

Monthly review

• Presidential and local authority elections have been called for March 22nd.
• The VMRO-DPMNE has selected Mr Ivanov, an academic, as its presidential candidate, and the opposition Social Democratic Alliance of Macedonia (SDSM) has picked a former minister, Ljubomir Frckovski.
• Parliament has adopted a budget for 2009 with a projected deficit of 2.8% of GDP, in spite of a call from the IMF for the draft budget to be reconsidered in view of the country's widening current-account deficit.
• The government has approved programmes to promote the competitiveness of Macedonian products and to help to modernise agricultural production.
• Real GDP growth slowed to 5.5% year on year in the third quarter, from 6.5% in the second quarter. There was robust growth in banking services, industry, tourism and agriculture.
• Industrial output in December declined by 10.1% year on year and by 7.3% month on month, reflecting the impact of the global economic downturn on Macedonia's export-oriented industries (mainly metals and textiles).
• The current-account deficit in January-October widened to US$975m, a nearly fivefold increase on the year-earlier period, as the trade deficit expanded and remittances declined.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49;47;80
NAICS Code: 22;48;62