Economy and Trade

Republic of Macedonia has focused all its strengths and potentials in economic development and creation of favorable business environment. With long-year macroeconomic stability and low inflation rate of average 2% in the last 10 years, the country has a balanced public finances with low budget deficit, stable exchange rate and low public debt totaling 32.5% of the GDP. Within the last three years a list of reforms were conducted in the area of labor market, along with active employment measures, which contributed to decrease of unemployment for about 4%. Wide-ranging reforms have improved the overall business environment, leading to increased foreign direct investments whish form 1998 to 2009 total EUR 3 billion. For these results achieved, during the last three years Macedonia was included among the top world reformers, according to the World Bank’s “Doing Dusiness Report” and was also indicated as a most favorable country for business start up in South-East Europe.(http://www.doingbusiness.org/reports/subnational-reports/south-east-europe)

 

Republic of Macedonia is a signatory of the multilateral agreements for free trade with the EFTA countries (2000) and CEFTA (2006), while with the Agreement of Stabilization and Association with the European Union (2001) Macedonia gained more favorable position on the EU market, complete liberalization for the Macedonian products entering European market, as well as liberalization of the EU products for the domestic market.

 

Industry

Strategic industrial sectors in Republic of Macedonia are: agriculture and food processing, metallurgy, textile industry, automotive components industry, construction, chemical industry, ICT sector.

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Agriculture is an important sector in the Macedonian economy. The gross value added of the primary agricultural production accounted for 8.9% of GDP for 2008, achieving a growth rate of 7.1%. The production of fresh and quality raw agricultural products in the country is a good base for the development of the food-processing sector, as well as for food facility construction. This industry has a strong reputation for quality food products and excellent access to regional and wider markets. The main products are: fruits, vegetable, wine, sheep and goat cheese. The share of food processing industry is 6% of GDP, covering about 12.000 employees and contributing with 11% of total employment in the industry.

 

suroviniRepublic of Macedonia has a geological structure rich with raw materials and minerals – metallic, non-metallic, Ornamental stones and marble, energy minerals, etc. In the total industry production, metallurgy covers 12%. Main resources in metallurgy are: lead, zinc, copper, Ferro, nickel, and Ferro silica mines. Development of metallurgy represents a base for the whole industry development and an important agent of economic growth. Approximately 11.000 workers have been employed in this industry branch.

 

The existing engineering and manufacturing tradition and legacy of skills available have enabled the automotive components industry to continually develop. The production of automotive components, dating back from 1960’s cooperation for the Serbian Zastava car-plant, has re-profiled and modernized with the entry of the corporate giants Johnson Controls and Johnson Matthey in the Free Economic Zones. Parts produced in Macedonia are distributed to the markets in Europe, Russia, Turkey, Africa, etc.

 

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Textile industry is another traditionally developed sector that contributes to the GDP with 15.6%. Macedonian textile is highly valued and recognized product on the world markets. The available textile production facilities have the necessary infrastructure, modern technology and qualified workers. Textile industry is of significant importance for the national economy primarily because of the high absorption of work force (37.84% of the total industry employments) and the realized export (30.8%).

 

IT2The most recent and fast growing industrial sector is the ICT. Macedonia has the best telecommunication networks in the region with 100% digital system. In line with global trends, Macedonian telecommunication market is developing rapidly, particularly in the mobile segment. The Law on Electronic Communication, which entered into force in mid 2005 and is harmonized with EU requirements, provides a stable and consistent regulation of the communication sector, thus enabling full liberalization of the market with the aim of attracting investments by domestic and foreign operators. High on Macedonia's development agenda is the development of information society based on knowledge, through expansion and application of ICT in all areas of live, and through creation of modern and efficient services for the citizens and the business community. Priority steps toward reaching this goal are: establishment of electronic system for public services; ensuring better economic efficiency, competitiveness and productivity, through reorganized and improved business processes and appropriate models for implementation of e-business; creation of contemporary and adjustable educational and research and fostering ICT oriented education, science and culture. Intense efforts for introducing and extensive usage of electronic communications and ICTs, contribute to Republic of Macedonia's inclusion in the global interconnected economy and to the achievement of significant economic growth and development.

 

In all industrial sectors major efforts have been focused on development of eco technologies and preservation of environment, above all by establishing a system for integrated permissions for the industrial facilities classified as serious polluters. Republic of Macedonia has built its future development programs on the concept for maximum utilization of renewable natural resources, aiming towards green sustainable development. Besides many sunny days that allow for considerable utilization of the solar energy, and the notable hydro-potential, Macedonia is as well located in one of the 19 geo-thermal regions on the planet, with recorded 25 geo-thermal water sources.

 

Technological Industrial Development Zones

To foster economic development and promote Republic of Macedonia as a business destination attractive for well established foreign companies, four free Technological Industrial Development Zones (TIDZ) were opened – two in Skopje, one in Stip and one in Tetovo. These four zones offer wide range of benefits for potential investors from the most advanced industries.  The Government of Republic of Macedonia is working on the development of another seven Technological Industrial Development Zones throughout the country, intended for equal economic development of all regions on the territory of the Republic of Macedonia. The goal of this initiative is Macedonia to become international business hub of the South-Eastern Europe by providing world-class infrastructure supported with service excellence and incentives unparalleled anywhere in the region and wider.

 

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The Directorate for Technological Industrial Development Zones (DTIDZ), officially launched in 2000, is in charge of further implementation of the strategy for accelerated economic development and overall progress of Macedonian economy. The first of the Technological Industrial Development Zone – Skopje 1 was Johnson Controls, whose project was completed and put into operation by the end of 2007.

 

More information are available through the website of the Directorate for Technological Industrial Development Zones.


Foreign Direct Investments

As a result of the improvement of the business environment and investment opportunities, the qualified and highly educated labor force, along with the growing interest in Macedonia’s investment potential, a number of international companies have started operations in the country, both as greenfield projects and through different types of asset acquisition and privatization. Some of the significant foreign investors include Johnson Matthey (UK), Mobilkom Austria (Austria), EVN (Austria),  T-Home (Germany), Societe Generale (France), Johnson Controls (USA), the National Bank of Greece (Greece), Hellenic Bottling Company S.A. (Greece), QBE Insurance Group Limited (United Kingdom), Mittal Steel (Netherlands), Duferco (Switzerland), and Titan Group (Greece).

 

InvestThe Macedonian Constitution guarantees equal, national treatment for all market participants and the right for foreign investors to freely transfer and repatriate investment capital and profits. In general, there are no limitations on foreign investments in the country, except in the areas of historical monuments, cultural wealth and trade with narcotics. For more information please visit: Invest in Macedonia: Invest in Macedonia.

 

Trade

Around 60% of the total trade of Macedonia is with the EU countries. The highest rate of trade exchange is realized with: Germany, Serbia, Greece, Bulgaria, Croatia, Bosnia and Herzegovina, Albania, Netherlands, Great Britain.

 

Transport

Republic of Macedonia is at the crossroad of the South-East European region, position that allows it to be the ideal center for transit and distribution of goods to the European markets. The well developed road and railway infrastructure, along with the relatively small territory of the country enables every part of the country to be easily reached in less than 3 hours. Two major pan-European transportations corridors – 8 and 10, pass through its territory, linking Central Europe to the Adriatic, Aegean and Black Seas. Road infrastructure is continually upgraded and modernized according to the latest standards. The railway network extends over 900 km. The principal North-South rail connection from Belgrade to the port of Thessalonica passes through Skopje. Macedonia has two international airports, in Skopje and Ohrid (www.airports.com.mk).

 

Vision for the Future

The three foundations upon which Republic of Macedonia is building its future are the three "E" – Europe, economy and energy – three interdependent and closely linked concepts that are key for the country's overall development. The vision of industry development in the period 2009-2020 is based upon a pro-active industrial policy that will encourage the orientation of Macedonian industry towards higher value-added products and services based on knowledge, innovation and collaboration. The future of Macedonian industry will be built on the development of capabilities in applied research and manufacturing of sustainable, organic and specialized high-tech products and services serving the needs of international niche markets. By 2020 Macedonia will develop the dynamic mix of sustainable and authentic industries such as: organic wine and foods, eco-steel, eco-friendly construction, ITC, specialized electronic parts, renewable energy production, creative industries, medical equipment and services, authentic tourism and other industries.

 

Economy in Numbers

GDP (2011 est.): $9.8 billion.
Per capita GDP (2010 est.): $9,400.
Real GDP growth (2011 est.): 3.5%.
Annualized inflation rate (2011, Consumer Price Index): 3.4%.
Unemployment rate (second quarter 2011): 31.3%.
Trade: Significant exports of metal compounds, catalysts, textiles, chrome, ferro-nickel, iron and steel, wine, tobacco, and lamb.