Country Report Macedonia March 2009

Summary

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 March 22nd.
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 a much-increased deficit target, brushing aside the IMF'sadvice.
The Economist Intelligence Unit forecasts a sharp slowdown in annual real GDP growth, to an average of 1.5% in 2009-10, owing to reduced import demand in the euro zone and great difficulties in accessing foreign finance.
We estimate a current-account deficit equivalent to 15.6% of GDP in 2008, although this is forecast to narrow to an average of around 10% in 2009-10 as a result of reduced import demand and lower international oil prices.

Campaigning has started in the presidential and local authority elections called for March 22nd.
Opinion polls indicate that although Mr Ivanov is ahead of his main rival, Ljubomir Frckovski of the opposition Social Democratic Alliance of Macedonia (SDSM), the first round of voting is unlikely to produce a winner.
The 2008 budget deficit amounted to Den3.9bn (US$90.8m), which was one-third less than the forecast figure, mainly because spending on capital investment fell well short of plans. The deficit was 0.8% of GDP.
Industrial output in 2008 increased by 5.5% after growth of 10.3% in the first three quarters, but it contracted in the final quarter as the downturn in the euro zone led to a sharp slowdown in import demand.
Consumer price inflation in January was 1.7% year on year, the lowest rate since mid-2007, following a large drop in transport prices.
Macedonia had a record trade deficit, of US$2.87bn, in 2008, as the prices of its main export productsmetals and textilesfell behind those of its imports.

Source: Country Report

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