Macedonia Country Dashboard – 2019 Q1 update

Analysis and publications

2019 Q1 continued the recent trend in upward growth (4.1 per cent YoY), pushing up the annual-average growth to 3.4 per cent (graph 1).

In production terms, all sectors except IT and Communication and Finance and Insurance made positive contributions. Wholesale and Retail Trade made the biggest contribution (1.3 percentage points), followed by Agriculture (0.65 percentage points) (graph 2). Agriculture increased 13.6 percent YoY, the biggest increase since 2013 Q4.

In expenditure terms gross capital formation led the way with a 9.9 percent increase YoY and a 4.2 percentage point contribution to GDP. Household consumption increased 2.6 percent YoY while Government spending was flat.


Unemployment continues to trend down with unemployment now at 17.8 percent.


Total inward FDI flows decreased by €280m to €29.7m in Q1 2019, falling below the five-year (€75m) and ten-year (€65m) averages. The large decrease was driven by historically larger reverse investment results for Q4 2018 (inflow) and Q1 2019 (outflow). Between the two quarters, reverse investment decreased by €334m, changing from an inflow to an outflow.

In Q4 2018, reverse investment was a €208m inflow, which is the largest inflow over the last five years. On the other side, the Q1 2019 result, a €127m outflow, was the largest outflow in the last five years. The movement between the two outliers was €334m, more than ten times the total net FDI inflow for Q1 2019. The five year average for reverse investments is a €3m outflow.

A reverse investment outflow is when an FDI company invests in or lends money to its parent company. A reverse investment inflow is when a parent company lends money or buys more equity its FDI company. Without access to individual company figures, it is difficult to determine what drove the recent big swing in reverse investments. It is important to note however that reverse investments are volatile and regularly swing between inflows and outflows.

Direct investment by direct investors (i.e. new initial investment by investors) increased over the quarter by €77m. This is encouraging as direct investment by direct investors represent new FDI relationships, which increases the current and potential future stock of FDI.

Over 12,000 jobs were created in the fourth quarter, with unemployment falling to 19.4 per cent. The average unemployment rate for 2018 was 20.7 per cent.