Economic Monitor
North Macedonia
North Macedonia’s economy grew by 3.5% in 2025, driven primarily by investment. The IMF forecasts growth of 3.1% for 2026, whilst the country’s close ties with the EU make its economy vulnerable to the weaker growth outlook in Europe. Higher energy prices resulting from the Iran conflict are likely to push up inflation and widen the trade deficit.
WA 04 | May 2026
Macroeconomic Analyses and Forecasting
Overview
- The economy grew by 3.5% in 2025, mainly driven by investment (2.4 pp contribution)
- IMF estimates growth of 3.1% for 2026, limited change despite Iran conflict (-0.1 pp)
- Reduced GDP forecasts in EU may be obstacle to growth in MKD as there are strong links of the economy with the EU (76% of exports, esp. car industry)
- Budget deficit at 3.9% of GDP in 2025. Government plans consolidation in 2026 (3.5%), but measures to contain effects of global oil price increase will take some strain on the budget
- Iran conflict leads to higher energy costs which cause a significant rise in inflation. New forecast for 2026: 4.5% (+1.5pp compared to Oct-25). Disinflation will take longer than initially expected
- Trade deficit likely to rise as Iran conflict raises costs for energy imports, while exports may decline due to reduced economic activity in the EU
- FDI inflows in 2025: EUR 468 m (2.8% of GDP); much lower than 2024, but equity FDI higher
The role of ICT in economic policy and FDI attraction
- Labour market. Much lower unemployment and much higher wages than 10 years ago
- Implications for economic policy and FDI attraction. Promote/target higher labour productivity
- In particular: digitalisation of public services and focus on digital transformation in FDI attraction
