Country Report Macedonia June 2009

Summary

The ruling Internal Macedonian Revolutionary Organisation-Democratic Party of Macedonian National Unity (VMRO-DPMNE) is in a strong position following its convincing victories in the presidential and local elections.
The new president, Gjorge Ivanov, is expected to work closely with the prime minister, Nikola Gruevskiunlike his predecessor, Branko Crvenkovski.
MrCrvenkovski faces an uphill task in rebuilding the main opposition party, the Social Democratic Alliance of Macedonia (SDSM)
Macedonia's relations with Greece will come under greater strain as the two countries argue before the International Court of Justice (ICJ) over Macedonia's claim that Greece is preventing it from joining NATO.
There is an increased risk to macroeconomic stability as weakening tax receipts render the government's capital investment programme unrealistic.
The Economist Intelligence Unit forecasts that real GDP will contract by 3% in 2009, reflecting the recession in Macedonia's main export markets and falling domestic demand. We expect a modest rebound, to growth of 0.5%, in 2010.
We forecast a decline in the current-account deficit, from the equivalent of an estimated 13.4% of GDP in 2008 to an average of 7.5% of GDP in 2009-10, as a result of slowing import demand and relatively low oil prices.

MrIvanov's inauguration on May 12th was boycotted by an ethnic Albanian opposition party, following Macedonia's failure to invite the president of Kosovo, Fatmir Sejdiu, in order to avoid offending Serbia.
MrCrvenkovski has been re-elected as leader of the SDSM.
For the first time since 2006 the first-quarter budget outturn was in deficit, with the shortfall amounting to Den1.8bn (US$38m).
The IMF has warned Macedonia that it may need to take additional measures to limit the budget deficit if revenue falls further than in the government's revised estimate. Macedonia has reiterated that it does not need IMF help.
The consumer price index (CPI) declined by 0.5% year on year in April, marking the return of deflation after more than four years.
Macedonia's first-quarter exports contracted by 43.3% year on year in USdollar terms, and its imports shrank by 27.8%, as a sharp drop in demand for exports of metals and textiles was not matched by lower oil prices.
A large trade deficit and much-reduced current transfers saw the year-on-year current-account deficit in January-February increase by 83.7%, to US$270m.

Source: Country Report

This report covers the following industry codes:
SIC Code: 10;60;70;49;20;47;37;65;48;53
NAICS Code: 212;52;72;22;11;311;48;336;53;517;44