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.
Country Dashboard – Q3 2020
The economic situation in Q3 2020 has slightly improved after the very poor results in Q2 2020. However, it is still early to talk about recovery, and the uncertainty is still high.
Gross domestic product
GDP growth in Q3-2020 was -3.3% compared to the same quarter last year (Graph 1). This performance is better than most projections for the third quarter, including Macedonia’s 2025 projection for a 4.5% -6.5% economic downturn, probably due to significant fiscal intervention in the economy. According to expectations, the negative effects of the crisis proved to be the strongest in the second quarter of the year, and the recovery process will be over a longer period of time. The last projection of the Ministry of Finance for the Macedonian economy in 2020 is -4.4%, with a recovery of 4.1% in 2021. On the other hand, the National Bank recently came up with new but also lower projections, with a 4.9% economic downturn in 2020 and a slower recovery of 3.9% in 2021. According to these projections, the country would return to the pre-crisis level of economic activity in 2022.
Positive development in Q3 2020 is the high level of gross investment of 29.3% of GDP, although it is still lower by 1.7 p.p. compared to Q3 2019 when it was 31% of GDP.
Labour market (15 to 64 years)
Labor market data, as expected, show mixed results in Q3 2020. On the one hand, the employment rate decreased compared to the same period in 2019 reaching 54.1%, continuing the downward trend started in the first quarter of 2020 (Graph 2). But, on the other hand, the unemployment rate in Q3 2020 (16.7%) decreased compared to unemployment a year ago (17.3%). The detailed analysis of employment shows that in Q3 2020 about 13.7 thousand jobs were lost compared to the same period in 2019, but with a large difference between the sexes: the number of employed women increased by 3.3 thousand, with which the rate of Women’s employment has increased, while the number of employed men has decreased by about 17 thousand.
Total foreign trade in Q3 2020 decreased by 2.6% compared to the same period last year. Negative movements were felt in both exports and imports. After the solid growth up to Q3 2019, we notice a decrease in export parameters in all consecutive quarters, starting from Q4 2019 to Q3 2020. Initially, the reduced export in Q1 2020 was due to negative movements on both the supply and demand side, where companies first faced a shortage of certain raw materials imported from China, which reduced their production and exports. However, already in the second half of March (and especially in April) there was a decrease in demand, both domestic and abroad, and, consequently, reduced exports, and this sharp decline can be seen in the figures for Q2 2020 (Chart 2) . The latest available data for Q3 2020 still indicate a slower flow of goods and services. In the period Q2 2020 – Q3 2020, imports also decreased, by 31.9% and by 3.5% compared to their respective quarters of 2019.
FDI – Foreign Direct Investment
Total FDI inflows in Q3 2020 have a negative sign of €17.8 million. This is the second consecutive quarter where FDI recorded negative growth in inflows. These FDI movements are in line with global financial flows and the general reservations of existing and new potential investors about entering into new investments or upgrading existing ones. Given the uncertainty prevailing in global financial markets and the inability of major economic players to secure a restart of supply and demand, a longer recovery period can be expected.
The other two indicators for which data are available, and are an integral part of the Matrix, are:
– Rule of law, where Macedonia is declining in terms of ranking for 2019, due to the deterioration of the assessment of dealing with systemic corruption and fair implementation of laws in court proceedings; and
The index for protection of the environment, which is increasing, i.e. improvement in the ranking in relation to the 180 countries that are part of this index. However, the progress in the ranking is not the result of an improved situation in the country, but of a larger setback in other countries. Namely, the assessment for Macedonia for 2018 (data are valid for 2 years) is 61.06 points (on a scale of 0-100), and for 2020 it is 55.4 points.