Country Dashboard – Q1 2020

Analysis and publications

Several years after the introduction of the Country Dashboard, in 2020 we conducted an audit process to make it even more relevant in the current global and domestic economic and social context, as well as in line with the desired future of the country (mainly accession to the EU). The revision consisted of two main processes: (i) a careful review of the economic growth indicators used for monitoring progress, with the aim of keeping the list of indicators as short as possible and maintaining simplicity, and (ii) identifying the right countries to compare to. The process was conducted by the Growth Committee of Macedonia2025, which is made up of top domestic and foreign experts. Small changes were made in the indicators to reflect changes in the economic and social environment and key areas where increased focus and improvement is needed. In relation to peer countries, a ranking of 19 countries has been prepared, which is used as a starting point for assessing the country’s progress.

The Macedonian economy showed modest results in Q1 2020, measured by the main macroeconomic indicators, such as gross domestic product (GDP), labor market developments,foreign trade, etc.

Gross domestic product

GDP growth in Q1 2020 amounted to 0.2% in comparison with the same quarter of the last year (Graph 1). Given the data available so far, alongside the health and economic consequences of the corona crisis, it is expected that the negative effects of the crisis will be strongest in the second quarter of the year, and the process of economic recovery will take a long time.

Graph 1: Real GDP growth, quarterly data for 2019 – 2020

Source: State statistical office of the Republic of North Macedonia

Labor market (15 – 64 yrs.)

Labor market data show positive developments in Q1 2020. The employment rate increased compared to the same period in 2019, reaching 55.6 percent, although it decreased slightly compared to Q4 2019 (Graph 2). Unemployment continued with the downward trend, dropping to 16.4% for the first quarter of 2020 (from 18.1%, in the same quarter from the previous year). However, considering the developments in the Macedonian economy in the second quarter of 2020, we expect these data to be subject to negative changes.

Graph 2: Unemployment and employment rates, quarterly data 2017 – 2020

Source: State statistical office of the Republic of North Macedonia

Foreign trade

Total foreign trade in Q1 2020 decreased by 5.6% compared to the same period last year. Negative movements were felt in both exports and imports. After the observed solid growth of exports in the overall monitoring period (2016-2019), we note a decrease in export parameters in the last two quarters, namely Q4 2019 and Q1 2020. The reduced exports is due to negative developments on both the supply and demand side. Namely, in Q1 2020, the companies first faced a shortage of certain raw materials imported from China, which reduced their production and exports. But already in the second half of March (and especially in April) there was a decrease in demand, both domestic and foreign, and, consequently, reduced exports. Economic restrictions in almost all countries (and our largest trading partners), slowed the flow of goods and services, travel bans, etc., strongly affected the foreign trade (especially in April and May). During this period, imports also decreased by 3.6% compared to Q1 2019.

Graph 3: Exports growth rate, quarterly data 2016 – 2020

Source: State statistical office of the Republic of North Macedonia

FDI – Foreign Direct Investment

Total FDI inflows in Q1 2020 amounted to € 132.7 million. This is still on a level about three times higher compared to Q1 2019, although it is a significant decrease compared to the inflows from the previous quarter. Given the overall economic – health developments, it is expected that inflows in Q2 2020 will decline.

Graph 4: Foreign direct investment inflows (EUR million), quarterly data 2017- 2020

Source: National Bank of the Republic of North Macedonia

Attached is the detailed Country Dashboard, with the latest available data.