Economic Monitor North Macedonia

An expansonary fiscal policy contributes to economic growth, but has budgetary and inflationary consequences.

WA 1 | June 2025

The economy grew by 2.8% in 2024
GDP to grow by 3.3% in 2025, driven by higher wages, pensions and public investment
High public spending contributes to growth in the short term, but has fiscal implications:
IMF projects a budget deficit of 5.0% of GDP in 2025; consolidation necessary
Expansionary fiscal policy contributes to higher inflation; Apr-25: core inflation above 5%;
no room for relaxation of monetary policy so far
EU accounts for more than ¾ of MKD exports of goods, partly due to integrated value chains in the automotive sector; in 2024, exports declined due to weak EU car industry
High FDI attraction in 2024: EUR 1.25 bn or 7.5% of GDP; strong DEU FDI in automotive sector
Remittances equivalent to 14% of GDP; no major dynamics in recent years

SEPA. MKD joined SEPA, operational starting Oct-25; savings of ca. EUR 62 m p.a. expected
TIDZs Technological Industrial Development Zones. Strong track record in attracting FDI
Electricity sector. Need to reduce production costs and align tariffs to incentivise investment