Country Report Macedonia January 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 presidential and local authority elections, scheduled for March.
• The VMRO-DPMNE and its ethnic Albanian coalition partner, the Democratic Union for Integration (DUI), command enough votes in parliament to pass various sensitive reforms mandated by the 2001 Ohrid peace agreement.
• Relations with Greece are set to come under greater strain, following Macedonia's appeal to the International Court of Justice (ICJ) over Greece's effective veto on Macedonia's NATO accession.
• Macroeconomic stability may face increased risk, after the government brushed aside the IMF's advice for greater fiscal discipline.
• The Economist Intelligence Unit forecasts a slowdown in annual average real GDP growth to around 2.5% in 2009-10, owing to reduced import demand in the euro zone and increasing difficulties in accessing foreign finance.
• We expect a widening of the current-account deficit to around 14% of GDP in 2008, although this is forecast to drop to an average of 10% in 2009-10, as a result of lower oil prices and reduced import demand.

Monthly review

• The Macedonian ambassador to the US, Zoran Jolevski, has been appointed as his country's new chief negotiator in the stalled talks with Greece over their dispute concerning Macedonia's official name.
• The first cracks in the government's popularity appeared in late November 2008, when teachers went on strike over pay and status. However, opinion polls suggest that the VMRO-DPMNE remains well ahead of the opposition.
• The IMF urged Macedonia in early December to reconsider plans for increasing the budget deficits in 2009 and after, and warned that the sharp rise in the current-account deficit has become the main risk to further growth.
• The Macedonian government adopted a set of measures in late November to lower the tax burden on businesses and individuals, in a bid to help the economy to weather the impact of the global downturn.
• The trade deficit in January-October rose by 80% year on year, to US$2.48bn, and the January-September current-account deficit widened to US$869m, following a steep rise in import costs and a drop in remittances.
• Industrial output in October fell by 9.9% year on year and by 16.9% month on month, as the sharp drop in demand in the euro zone for Macedonian metals and textile exports began to have an impact on production at home.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49;60
NAICS Code: 22;52

This report covers the following industry codes:
SIC Code: 49;60
NAICS Code: 22;52